by Mark Miller

photo via pixabay

The federal government is considering an extension of the federal subsidy of COBRA health insurance benefits for laid-off workers

COBRA is the federal law that allows workers to hold on to their health insurance benefits after a job loss. Under normal circumstances, coverage typically is available for 18 months but at a steep price: the former employee usually pays 100 percent of the premium plus a 2 percent administrative fee. The coverage is expensive but can be an especially important option for individuals who may not be able to obtain new coverage due to preexisting conditions. The coverage gap issues are especially acute for older workers who may have been forced into premature retirement due to the economic turmoil but are  too young to obtain Medicare coverage (age 65).

Under the economic stimulus act passed earlier this year, the federal government pays 65 percent of COBRA premiums for up to nine months. This week, White House officials indicated they are considering an extension of the benefits as part of a broader set of steps aimed at bolstering the safety net for unemployed workers. That came in the wake of more bad news on the jobs front last week; The U.S. Labor Department said employers cut more jobs in September than in August.

Rep. Joe Sestak (D-Pennsylvania), introduced legislation last week that would extend the federal subsidy of COBRA health insurance benefits. Under the original subsidy passed earlier this year, the government provides a 65 percent subsidy of COBRA benefits for nine months for people who lost their jobs between Sept. 1, 2008 and Dec. 31, 2009.
Here are details on how Sestak’s bill would extend the subsidy as follows:

--Extends by 6 months– from 9 to 15 months– the total allowable time an unemployed worker can receive COBRA premium assistance. This will allow workers who enrolled in the program in February to continue on until at least May 2010.

--Extends the assistance to individuals who are involuntarily terminated between January 1 and June 30, 2010.

--Extends eligibility for traditional COBRA coverage an additional 6 months, from 18 to 24 months, for those terminated at the beginning of the economic recession in 2008. No extended COBRA premium assistance or extended COBRA benefits would extend beyond December 31, 2010.”

The benefit has been especially important to older workers who lose their jobs or forcibly retired early but are too young to qualify for Medicare.