Strong Possibility for COBRA Subsidy Extension – Free Webinar 12/3

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November 2009

Recently the Department of Labor reported that in September the economy lost 263,000 jobs, substantially more than economists predicted. With the calendar year nearing an end, the Obama administration and Congress are still contemplating extending the COBRA subsidy which pays 65% of the cost of COBRA health coverage for unemployed American workers who were involuntarily terminated during these difficult economic times.

On October 26th, Representative Joe Sestak (D-Pennsylvania) introduced a bill to the House of Representatives called the Extended COBRA Continuation Protection Act of 2009 (HR3930). Representative Sestak’s bill calls for an extension of the original federal COBRA subsidy provided by the ARRA. Currently, COBRA subsidy eligibility is scheduled to run out December 31st, 2009 though the subsidy can be used by recipients through the end of September 2010.

If the Extended COBRA Continuation Protection Act of 2009 passes congress it would:

  • extend the length of time an individual could receive the subsidy from 9 months up to 15 months, allowing individuals who have been enrolled in the COBRA subsidy since February 2009 to receive the subsidy until May 2010.
  • allow individuals who are involuntarily terminated from their jobs between January 1, 2010 and June 30, 2010 to also receive the subsidy, though the subsidy will end by December 31, 2010.
  • also extend the length of eligibility for traditional COBRA coverage by 6 months, up to 24 months, for individuals who lost their jobs at the beginning of the recession.
  • gives qualified beneficiaries a second election right retroactive to their expiration date of COBRA coverage if it has already expired.

While nobody is certain whether or not the COBRA subsidy will be extended, there are many more factors that point to it being extended than there are to the subsidy eligibility running out at the end of this year. The advice being given by many HR professionals is for employers to plan on the COBRA subsidy to be extended.

Click here to be transport to the Library of Congress – To find the Extended COBRA Continuation Protection Act of 2009, simply click the link and search for Bill Number HR3930.