House Bill Would Extend COBRA Subsidy by Six Months

Legislation introduced in the House of Representatives would extend and expand an expiring provision in a 2009 economic stimulus law in which the federal government pays 65 percent of COBRA health care premiums of employees who are involuntarily terminated.

That subsidy is available for up to nine months for employees who have lost their jobs since September 1, 2008. Unless the law is extended, the subsidy will not be available to employees laid off after December 31.
 
Under H.R. 3930, introduced this week by Rep. Joe Sestak, D-Pennsylvania, the subsidy would be provided for up to 15 months. In addition, those laid off from January 1, 2010, through June 30, 2010, also would be eligible for the subsidy.

Without an extension of the current law, employees who began collecting the subsidy on March 1—when it first generally became available—will lose it at the end of November.

“Losing one’s job is difficult enough. But losing one’s health care along with it—and worrying about being able to get treatment for oneself and one’s family, or fearing bankruptcy in the event of injury or illness—is something Americans should not have to cope with in this difficult time,” Sestak said in statement.

The subsidy has had a dramatic effect on the percentage of eligible COBRA beneficiaries opting for coverage. A Hewitt Associates Inc. study released in August found that the percentage of laid-off employees opting for COBRA doubled to 38 percent after the subsidy was enacted compared with the opt-in rate in the several months prior to the subsidy.

The Obama administration has been looking into whether the subsidy should be extended.

Filed by Jerry Geisel of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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