COBRA Subsidy -- retroactive eligibility

[Guest Indylaw]

I need some help on a COBRA subsidy scenario. I am working on an employment termination/settlement agreement. As a result of the settlement agreement, we are changing the termination date of an employee so that he is now eligible for the COBRA subsidy as the termination has gone from "for cause" so he didn't get his 90 day notice period, to "without cause" so now he gets the 90 day notice period in his employment contract. Employee has been on COBRA since last November and has been paying 100% of the premium. He asked for the COBRA subsidy and we agreed to pay him for the 65% so long as we are eligible to get the credit. I believe that there is nothing that would limit this guy from being eligible for the subsidy and so we could get the credit retroactive to March 1. However, the COBRA administrator is saying that the guy had to complete his COBRA subsidy application and send it back within 60 days of them mailing it to him, which it did back in April, in order for him to be eligible for the subsidy. He didn't complete the application and send it back to them within 60 days. However, if he had, he wouldn't have been eligible for the subsidy back then because his termination date was prior to Sept 1, 2008, at that point. However, I can't find a 60 day limit to complete the application in any law or guidance from the DOL. The only 60 day limit I can see is for persons electing COBRA. This guy was already on COBRA when he received the subsidy application, he was just paying 100%. So, two questions: (1) Anyone know if it is permissible to get the subsidy retroactive to march 1? (2) Anyone aware of a 60 day limit on completing the subsidy application? We don't want to give him the 65% if we can't get a payroll tax credit for it. The CFO doesn't want to claim the payroll tax credit (for documentation/IRS audit purposes) since the COBRA TPA is saying he's not eligible due to not timely completing the application.

Thanks!

[Guest mydayjob]

We dealt with this recently (the 60 day limit--not the change in termination dates). The DOL arranged a conference call with the employer and COBRA TPA and indicated that there is no limit and that the individual is eligible for the subsidy.