In the past two months, both the House and Senate have proposed legislation that would extend the COBRA subsidy for health insurance created by the America Recovery and Reinvestment Act of 2009 (ARRA). The ARRA subsidy will begin to expire on December 1, 2009 without government action. As the subsidy expires, unemployed Americans receiving the subsidy will see their COBRA premiums increase from 35% to 100% of the premium cost.
Both the House and Senate bills would extend the COBRA subsidy, but the terms vary.
The “Extended COBRA Continuation Protection Act of 2009,” House bill (H.R. 3930), was introduced on October 23 by Representative Joe Sestak (D-Pa). It would extend for six months the maximum COBRA period for individuals whose coverage was the result of a termination or reduction in hours occurring on or after April 1, 2008 and before January 1, 2010. The bill would also extend the eligibility period for the ARRA COBRA subsidy from December 31, 2009 to June 30, 2010, and would extend the maximum period of ARRA premium assistance from 9 to 15 months. The House bill has been referred to the Committees on Education and Labor, Energy and Commerce, and Ways and Means.
The Senate version of the bill, the “COBRA Subsidy Extension and Enhancement Act,” (S. 2730) was introduced on November 4 by sponsors Senators Robert Casey (D-Pa), and Sherrod Brown (D-Ohio). The bill also has the support of Senators Al Franken (D-Minn.), Arlen Specter (D-Pa), Robert Mendez (D-N.J.), and Sheldon Whitehouse (D-R.I.). The Senate bill contains some of the same features as the House version, such as extending the eligibility period for six months until June 30, 2010, and extending the subsidy period from 9 to 15 months. In addition, however, the Senate bill extends subsidy eligibility to employees who lose their health insurance because of a reduction in working hours (as opposed to complete loss of employment), and to employees who are eligible for retiree health coverage. Another noteworthy aspect of the Senate bill is an increase in the subsidy amount, from 65% of the cost of the COBRA premium to 75%. The Senate bill has been referred to the Committee on Health, Education, Labor and Pensions.
Some version of the COBRA subsidy extension is expected to pass. Employers should stay alert to these legislative developments and should be prepared to revise existing COBRA notices. COBRA participants will need to be informed of all changes, deadlines and expirations. The Department of Labor provides information about COBRA and COBRA Model Notices to employers. However, specific legal advice from counsel should be obtained as to how best to implement any legislative changes.