President Obama signed a bill which extends the COBRA subsidy of the American Recovery and Reinvestment Act of 2009 (ARRA) through May 31, 2010. Read about the original subsidy here: http://www.simplicityhr.com/resources/law/cobra-changes. 

Commonly known as the federal stimulus package, ARRA provides a 65% subsidy of COBRA continuation coverage to qualifying individuals who are involuntarily terminated from employment. The recent extension includes a provision that allows employees who experience a loss of healthcare coverage due to reduction of hours and are then involuntarily terminated between April 1 and May 31, 2010 to now qualify for the subsidy. 

The extension widens the pool of former employees that employers must now cover under federal law. Employers of these qualifying former employees must fund 65% of the cost of their health plan premiums up front. Employers must then apply for tax credits—after the fact—to get reimbursed. 

For more information, please visit the U.S. Dept. of Labor website at www.dol.gov/COBRA.