COBRA Subsidy Ends … but Another Extension is Likely
June 2, 2010
Congress failed in its efforts before Memorial Day to pass a nearly $200 billion package that would have extended unemployment benefits and other expiring provisions, including ARRA’s COBRA subsidy program. The 15 months of federally subsidized COBRA premiums for involuntary terminations of employment that needed to occur by May 31, 2010, came to an end.
As a result, individuals who are involuntarily laid off on or after June 1 are not eligible to receive the 65 percent COBRA premium subsidy and will have to bear the full cost of their COBRA coverage if they elect it. Those assistance-eligible individuals already receiving the premium reduction, and are eligible to continue to receive the subsidy for up to 15 months, are not affected.
“More than likely we will see another temporary measure in June,” said compliance manager Jim Trimble, with Ceridian’s Finance & Regulatory Management department. Congress is set to return from Memorial Day recess on June 7. Congress has extended the COBRA subsidy for unemployed workers three times since February 2009, when it was passed as a provision within the American Recovery and Reinvestment Act (ARRA). The last extension of the ARRA subsidy was passed in April.
Trimble noted that there are bills pending in Congress that would retroactively extend the subsidy. But the question is, How long will the program be extended? “The proposed extensions run from 14 days to 30 days to November 30, 2010, to the end of the year,” he said. “In any case, the duration of the available subsidy would remain 15 months, as under current law.”
Most recently, Democratic leaders in the U.S. House of Representatives released revisions to the substitute amendment to the American Jobs and Closing Tax Loopholes Act (H.R. 4213), which included an extension of the COBRA premium assistance program. However, the House, in the bill it ultimately passed on May 28, struck the ARRA extension for COBRA. The Senate, on the other hand, is considering a 14-day extension, which it wouldn’t vote on until after the Memorial Day recess. And, considering the political climate in Washington, D.C., the measure would quite possibly expire before it was approved by the House and then enacted by the President.
Although a popular provision, COBRA subsidy extensions have in the past been caught up in the politics over government spending. Many see the premium reduction program under ARRA being extended for as long as high unemployment rates continue. The program has been considered an essential lifeline for unemployed American families. The U.S. Department of Treasury reported recently that between one quarter and one third of eligible unemployed workers enrolled in subsidized COBRA for continuing health insurance.
