HR Management & Compliance

Congressman Introduces COBRA Subsidy Extension Legislation

Update Dec. 21, 2009: President signs bill including COBRA subsidy extension

Representative Joe Sestak (D-Pennsylvania) introduced the Extended COBRA Continuation Protection Act of 2009 (H.R. 3930) this week in the U.S. House of Representatives. The proposed bill would extend the original federal COBRA subsidy created by the American Recovery and Reinvestment Act of 2009 (ARRA), which President Barack Obama signed into law in February.

Under ARRA, the federal government pays 65% of COBRA premiums for up to nine months for employees who were involuntarily terminated between September 1, 2008, and December 31, 2009. This subsidy is set to expire at the end of this year, and the subsidy will end in November for individuals who have been receiving it since March.

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.

Since the U.S. Department of Labor (DOL) released the high unemployment statistics for September, there has been a lot of speculation that Congress will extend the COBRA subsidy benefit. More specifically, White House Press Secretary Robert Gibbs has noted that Obama would look into whether the subsidy should be extended, and Democrats in the U.S. House of Representatives also indicated they would consider an extension of the subsidy.

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