Congress approves COBRA premium subsidy extension

WASHINGTON—The Senate, in a rare Saturday session, approved a military spending bill that would extend federal COBRA health insurance premium subsidies for the unemployed.

H.R. 3326, which the House approved this week, cleared the Senate on an 88-10 vote. The bill would extend the nine-month, 65% premium federal subsidy by six months. The change would apply to those who are involuntarily terminated through Feb. 28, 2010.

Under current law, employees who lose their jobs after Dec. 31 are ineligible for the subsidy.

The legislation also would provide another six months of subsidized coverage for beneficiaries whose nine-month COBRA premium subsidy has run out.

In addition, the legislation would give beneficiaries whose subsidy expired and who didn't pay the full premium the opportunity to receive retroactive coverage. For example, a beneficiary whose nine months of subsidized coverage ran out Nov. 30 and who didn't pay the unsubsidized premium for December could pay his or her 35% share in January and receive COBRA coverage for December.

The legislation would require employers to notify current and future COBRA beneficiaries of the new 15-month premium subsidy.

The fate of the legislation has been followed closely by terminated workers—eager to know whether the subsidy will be extended—as well as employers who need to tell beneficiaries the COBRA premium they should pay.

The legislation makes clear that employers can offset future COBRA premiums or issue refund checks for beneficiaries who overpaid their COBRA premium. That could happen if a beneficiary whose subsidy ran out in November paid the full premium rather than the 35% share in December.

President Obama is expected to sign the bill.