Stopgap COBRA Subsidy Extension Bill Expected

Top Senate Democrats are expected to introduce legislation this week that would provide a stopgap 15-day extension of federal COBRA health care premium subsidies, Washington observers say.

The measure, likely to be introduced by Senate Majority Leader Harry Reid, D-Nevada, would extend the federal premium subsidy to employees involuntarily terminated from March 1 through March 15. The subsidy pays 65 percent of an individual’s COBRA premiums for up to 15 months.

Without the extension, employees laid off after February 28 would not be eligible for the subsidy.

The short extension would buy time while Democratic legislators develop a broader bill that would include a longer COBRA subsidy extension.

“The 15-day extension serves a dual purpose. It would allow more time to bring up the larger jobs agenda bill, including a COBRA subsidy extension, while avoiding the expiration of eligibility on February 28,” said Frank McArdle, a consultant with Hewitt Associates in Washington.

An extension of the COBRA premium subsidy through May 31 had been part of a bipartisan jobs bill previously put together by top members of the Senate Finance Committee.

But Reid stripped out the COBRA provision and numerous others in favor of a more narrowly focused jobs bill, which the Senate is expected to approve soon. After that, several additional jobs-related bills are expected to be proposed by Reid, including one that would include a multiple-month COBRA premium extension provision, observers say.

Just more than a year ago, Congress passed a nine-month federal COBRA premium subsidy as part of a massive economic stimulus bill. The subsidy was available to employees laid off from September 1, 2008, through December 31, 2009.

Then, last December, federal legislators, as part of bill appropriating funds for the Department of Defense, extended the subsidy to employees laid off through February 28, while increasing the length of the subsidy to 15 months from nine months.

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

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