Congress Approves COBRA Premium Subsidy Extension

 

The Senate, in a rare session Saturday, December 19, approved a military spending bill that would extend federal COBRA health insurance premium subsidies for the unemployed.

H.R. 3326, which the House approved this week, cleared the Senate on an 88-10 vote. 

President Barack Obama signed the bill Monday, December 21. 

The bill would extend the nine-month, 65 percent premium federal subsidy by six months. The change would apply to those who are involuntarily terminated through February 28, 2010.

Under current law, employees who lose their jobs after December 31 are ineligible for the subsidy.

The legislation also would provide another six months of subsidized coverage for beneficiaries whose nine-month COBRA premium subsidy has run out.

In addition, the legislation would give beneficiaries whose subsidy expired and who didn’t pay the full premium the opportunity to receive retroactive coverage. For example, a beneficiary whose nine months of subsidized coverage ran out November 30 and who didn’t pay the unsubsidized premium for December could pay his or her 35 percent share in January and receive COBRA coverage for December.

The legislation would require employers to notify current and future COBRA beneficiaries of the new 15-month premium subsidy.

The fate of the legislation has been followed closely by terminated workers—eager to know whether the subsidy will be extended—as well as employers who need to tell beneficiaries the COBRA premium they should pay.

The legislation makes clear that employers can offset future COBRA premiums or issue refund checks for beneficiaries who overpaid their COBRA premium. That could happen if a beneficiary whose subsidy ran out in November paid the full premium rather than the 35 percent share in December.

March 17, 2010
House Passes Stopgap COBRA Subsidy Extension
Federal COBRA health insurance premium subsidies would be extended temporarily once again under legislation approved Wednesday, March 17, by the House of Representatives.

Under the bill, H.R. 4851, proposed Tuesday by Ways and Means Committee Chairman Sander Levin, D-Michigan, and approved by the House on a voice vote, the 15-month, 65 percent federal premium subsidy would be extended to employees involuntarily terminated from April 1-30.

Without an extension, employees laid off after March 31 would not be eligible for the subsidy.

As part of a broader bill, H.R. 4213, the Senate last week approved a longer extension to enable employees laid off through the end of the year to receive the subsidy, but the House has yet to take up that measure because of funding concerns about certain provisions in the bill, observers say.

The latest stopgap extension would continue the politically popular subsidy for newly laid-off employees and allow Congress more time to try to reach agreement on the broader bill with the longer extension.

“There is no doubt in my mind that, through one way or another, the subsidy will be extended through the end of the year,” said Frank McArdle, a consultant with Hewitt Associates Inc. in Washington.

Earlier this month, legislators approved and President Barack Obama signed into law a 31-day extension to ensure that employees laid off from March 1-31 would be eligible for the subsidy.
 

March 30, 2010

We are extremely sorry to have to tell you that Congress has gone into recess without passing the 30 day extension of the UI and COBRA programs, and that it appears extremely unlikely that the Senate will be called back into session for a vote before April 5th, when the programs expire. We have learned that the Senate has scheduled a cloture vote (a vote to end debate on the bill - they must get 60 votes to move forward) for 5:30 pm on Monday, April 12th, at which time they'll try to move the 30 day extension through as quickly as possible. Simultaneously, and we hope over the recess as well, they will be working with the House to resolve some differences in the bill that would extend these programs through the end of 2010. We are hoping that year-end extension will be firmly in place long before the end of April.

We wish we had better news for you. We have been in close contact with many of the state UI agencies and the organization that unites them all and they will be working diligently to get their programs back up and running as quickly as possible once Congress acts. We hope that for those of you who face a disruption in benefits that it will be short-lived.

A few things to remember:
-If you are in the middle of a tier of benefits, you will be able to remain on that tier and finish it out before you benefits lapse. We hope that this lapse is so short lived that a minimal number of people are impacted, though we know for those who lose benefits, the impact will be great.
-When the programs are reinstated, they will be retroactive so you will eventually receive every bit of benefits you would have had the programs not lapsed. We know that for many of you the disruption is devastating even if retroactive, so we do not mean to minimize the impact, but wanted you to all know that benefits will be retroactive.