WASHINGTON—With hundreds of thousands of laid-off employees soon to lose a federal subsidy of their COBRA health insurance premiums, more lawmakers are introducing legislation to extend and increase the subsidy.
Under bill, S. 2730, proposed by Sens. Sherrod Brown, D-Ohio, and Bob Casey, D-Pa., the nine-month subsidy would be extended by six months to 15 months, and the 65% federal premium subsidy would be raised to 75%.
In addition, workers who lose their jobs through June 30, 2010, would be eligible for the subsidy. Under the current law, employees who lose their jobs after Dec. 31 will not be eligible for the subsidy.
And due to an unusual way the current law is written, employees laid off before Dec. 31, but whose COBRA eligibility doesn’t begin until next year also would not be eligible for the subsidy. That could happen, for example, if an employee is laid off in mid-December and the individual’s former employer voluntarily extends group coverage through the end of the month.
“This legislation will make health care coverage more affordable for laid-off workers and bring some security in troubling times,” Sen. Casey said in a statement.
A somewhat similar bill was introduced in the House last month by Rep. Joe Sestak, D-Pa. The Sestak bill, though, would keep the subsidy at 65%.
The proposals come as the subsidy soon will run out for laid-off employees who became eligible for the subsidy when it started, which generally was March 1.
A Hewitt Associates Inc. study found that the percentage of involuntarily terminated employees opting for COBRA doubled to 38% compared to the opt-in rate in the several months prior to the subsidy.
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