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Minnesota COBRA Changes and Federal COBRA Subsidy Update
August 2010

By: Kevin M. Mosher, Esq.

In a slight change to Minnesota's COBRA law, effective May 25, 2010, employers (or trusts) now have up to 14 days in which to notify a terminated or laid-off employee of the following:

  • His/her right to elect continued medical insurance coverage;
  • The amount he/she must pay monthly to the company to retain the coverage;
  • The details regarding the payment of the premiums to the company; and
  • The timing of the payments.

Prior to the change, Minnesota employers or trusts administering medical insurance plans had only ten (10) days in which to inform employees of their rights for continued post-employment benefits, making the additional time a welcome change to the law.

Minnesota's slight change in procedures, however, appears to have been seemingly drowned-out by the politics behind the federal extension of the COBRA subsidy known as the ARRA. Under the ARRA, eligible employees terminated by May 31, 2010, were entitled to up to 15 months of a premium subsidy of 65%. However, Congressional rankling over the extension of unemployment benefits, to which the ARRA has been legislatively tied, has resulted in no extension of the federal subsidy. Similarly, for Minnesota employers and employees, the Minnesota COBRA subsidy created to offset the remaining 35% for certain qualifying employees will no longer be available since receipt of the federal ARRA subsidy is required for eligibility.

It is yet to be determined whether Congress will come to a compromise on unemployment and an extension of this COBRA premium subsidy. Re-writes of the proposed legislation have been sponsored and defeated through much of June. Although sponsors promise a renewed effort to continue these benefits, it is unclear whether sufficient support will be there in July absent further watering-down of the benefits previously available to unemployed workers (particularly given the passing of supporter Senator Robert Byrd of West Virginia).

Contact any Wessels Sherman attorney in the Minneapolis, MN office to discuss questions regarding this subject.