Senate Bill Would Boost, Extend Federal COBRA Subsidy

With hundreds of thousands of laid-off employees soon to lose a federal subsidy of their COBRA health insurance premiums, more lawmakers are introducing legislation to extend and increase the subsidy.

Under bill S. 2730, proposed by Sens. Sherrod Brown, D-Ohio, and Bob Casey, D-Pennsylvania, the nine-month subsidy would be extended by six months, to 15 months, and the 65 percent federal premium subsidy would be raised to 75 percent.

In addition, workers who lose their jobs through June 30, 2010, would be eligible for the subsidy. Under the current law, employees who lose their jobs after December 31 will not be eligible for the subsidy.

And because of the unusual way the current law is written, employees laid off before December 31 but whose COBRA eligibility doesn’t begin until next year also would not be eligible for the subsidy. That could happen, for example, if an employee is laid off in mid-December and the individual’s former employer voluntarily extends group coverage through the end of the month.

“This legislation will make health care coverage more affordable for laid-off workers and bring some security in troubling times,” Sen. Casey said in a statement.

A somewhat similar bill was introduced in the House last month by Rep. Joe Sestak, D-Pennsylvania. The Sestak bill, though, would keep the subsidy at 65 percent.

The proposals come as the subsidy soon will run out for laid-off employees who became eligible for the subsidy when it started, which generally was March 1.

A Hewitt Associates study found that the percentage of involuntarily terminated employees opting for COBRA doubled to 38 percent compared with the opt-in rate in the several months before the subsidy.

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

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