The Temporary Extension Act of 2010, made law March 10 just hours after the U.S. Senate passed it, extends unemployment benefits and health care subsidies for the unemployed.

It also extends through March 31 a federal tax credit that allows the federal government to subsidize 65% of the cost of COBRA premiums. The law also clarified the treatment of COBRA continuation that results from reductions in hours followed by termination of employment.

The COBRA subsidy was first enacted as part of the American Recovery and Reinvestment Act of 2009. Under the provision, as long as an eligible individual pays 35% of the premium for COBRA continuation coverage, the group health plan must treat the individual as having paid the full premium. Eligible individuals can receive this subsidy for up to 15 months. Employers are reimbursed for the 65% subsidy by taking a credit on their payroll tax returns.

To be eligible, individuals must have been involuntarily terminated from their employment after Aug. 31, 2008, and before April 1, 2010. The Temporary Extension Act extended the end of the eligible period from Feb. 28 to March 31.

Also under the act, if an individual did not make a COBRA continuation coverage election when his or her hours were reduced (or made an election but then discontinued COBRA coverage) and if the individual is then involuntarily terminated from employment, that will be treated as a qualifying event for COBRA continuation coverage purposes.