President Obama signed H.R. 4851 into law on April 15, 2010. The new law amends the American Recovery and Reinvestment Act of 2009 (“ARRA”) yet again to extend the 65% COBRA premium assistance through May 31, 2010.

The COBRA subsidy was originally provided as part of the ARRA in 2009.  If an employee is involuntarily terminated on or before May 31, 2010 and is otherwise eligible for COBRA, he or she is eligible to receive a 65% subsidy in his or her COBRA premiums. This means the former employer pays 65% of the health insurance premium under COBRA and the employee pays the remaining 35%. Employers can then apply for a tax credit for the portion of the COBRA premium they pay.