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Congress Considering New Bills to Extend COBRA Subsidy

Bills have recently been introduced in Washington to extend the COBRA subsidy provisions originally provided under the American Recovery and Reinvestment Act of 2009. On October 26, 2009, Representative Joe Sestak (D-Pa) introduced HR 3930 in the House, and on November 5, 2009, Senator Sherrod Brown (D-OH) introduced S 2730.

The current COBRA ARRA amendments provide a subsidy of 65 percent of the cost of COBRA continuation coverage for up to 9 months for employees who were involuntarily terminated between September 1, 2008 and December 31, 2009, as well as their spouses and dependents. The bills currently being considered by the House and Senate have different provisions, but both would extend coverage for the COBRA subsidy to involuntary terminations occurring up until June 30, 2010 (effectively extending the subsidy for an additional 6 months).

The House Version (HR 3930) contains the following proposals:

  • For individuals involuntarily terminated between April 1, 2008 and December 31, 2009 (and their spouses/dependents), the normal COBRA coverage period would be extended from 18 months to 24 months; the COBRA subsidy will be available to persons who are involuntarily terminated up until June 30, 2010 (rather than December 31, 2009 as in the current law), as well as the spouses/dependents of such terminated employees; and the 65 percent COBRA subsidy would be available for a maximum of 15 months (rather than the 9 month period under current law) to each assistance-eligible individual.

The Senate Version (S. 2730) contains the following proposals: The COBRA subsidy is proposed to increase from 65 percent to 75 percent of the COBRA premium; the COBRA subsidy will be available to persons who are involuntarily terminated up until June 30, 2010 (rather than December 31, 2009 as in the current law), as well as the spouses/dependents of such terminated employees; the COBRA subsidy will be available for a maximum of 15 months (rather than the current 9 months) to each assistance-eligible individual; and “Assistance eligible individuals” will be re-defined to include persons suffering a reduction in hours resulting in a loss of health insurance coverage occurring after February 17, 2009.

HEC will be closely monitoring these bills to see if Congress will be able to act before the current COBRA subsidy lapses on December 31, 2010. Stay tuned.