The End of COBRA Subsidy As We Know It (Or Is It?)

As part of President Obama’s stimulus plan, ARRA (American Reinvestment and Recovery Act), employees who lost their jobs through no fault of their own were given COBRA assistance to the tune of 65% of the premium so long as their employment ended between Sept. 1, 2008, and Dec. 31, 2009. This means that this benefit is set to expire in 2 weeks, with no relief for those who lose their jobs in 2010.

The good news is that the Extended COBRA Continuation Protection Act of 2009 (H.R. 3930) was introduced to the House by Representative Joe Sestak (D-Pennsylvania).

From The Employment Law Post:

According to Sestak, the new subsidy would extend:

• The total allowable time an individual could receive the COBRA subsidy by six months (from nine to 15 months);
• The subsidy to individuals who are involuntarily terminated between January 1, 2010, and June 30, 2010; and
• Eligibility for traditional COBRA coverage an additional six months (from 18 to 24 months) for individuals who were terminated at the beginning of the recession in 2008.

Under the proposed legislation, individuals who were enrolled in the original COBRA subsidy since February would continue to receive it until at least May 2010.

World at Work provides a chilling look at how the demise of this program would affect individuals:

According to a new report from Families USA, unemployed individuals who are in line to lose the subsidy will see their COBRA premiums rise from $389/month to $1,111/month, which would consume approximately 83% of the average monthly unemployment check.

From what I can tell, HR 3930 hasn’t made a great deal of progress. According to Open Congress, the Bill was referred to the Subcommittee on Health, Employment, Labor, and Pensions.

It’s amazing how slowly the wheels turn. Let’s hope they can get this bill passed before January 1, 2010.

UPDATE: I just read today that Senator Sherrod Brown of Ohio has introduced the COBRA Subsidy Extension and Enhancement Act (S. 2730) to the Senate this week. Per BLR:

Brown’s legislation, the COBRA Subsidy Extension and Enhancement Act (S. 2730), would extend the program to provide a total of 15 months of subsidies. The legislation would make other changes as well, such as increasing the subsidy from 65 percent to 75 percent…The legislation would also extend the subsidy to workers whose hours are reduced to such a degree that they lose eligibility for employer-sponsored health benefits. Currently, only involuntary terminated workers are eligible for the program.

I stand corrected. These wheels are moving faster than I thought.

UPDATE 2: The House passed COBRA subsidy extension and expansion as part of the House Amendment to the Senate Amendment to H.R. 3326 — Department of Defense Appropriations Act, 2010!!!

UPDATE 3: Looks like President Obama approved it!
From SHRM:

President Barack Obama signed legislation into law on Dec. 19, 2009, extending for six months a federal subsidy to help unemployed workers acquire health insurance through their former employers’ health care plans. The law takes effect immediately…he new law provides an extra six months of federal subsidy payments that allows unemployed workers to purchase health care coverage guaranteed by the Consolidated Omnibus Reconciliation Act, better known as COBRA. The new law extends eligibility for the subsidy program for two months. The extension was added to the Department of Defense spending package (H.R. 3326), which passed the House and Senate by overwhelming margins.