COBRA subsidy extension now in draft jobs bill

WASHINGTON—Federal COBRA health insurance premium subsidies would be extended and expanded under a draft jobs bill being put together by top Senate Democrats.

In its current version, the draft bill would extend the current COBRA premium subsidy provided to involuntarily terminated employees another three months so employees laid off in March, April and May of this year would be eligible for the 65% subsidy for up to 15 months.

Under current law, employees involuntarily terminated from Sept. 1, 2008, through Feb. 28, 2010, are eligible for a 15-month premium subsidy.

In addition, the draft bill would allow employees who lost group health insurance coverage due to a reduction in the number of hours they work work and later were involuntarily terminated to receive the COBRA premium subsidy, assuming certain conditions were met.

The White House earlier proposed extending for 12 months COBRA premium subsidies for employees laid off from March 1 through Dec. 31 of this year.

Other provisions in the draft bill would give employers more time to fund their pension plan obligations. Business groups have been pressing legislators for pension plan funding relief for more than a year. Without such relief, employers will face huge increases in contributions to their plans, which have been battered as low interest rates have caused the value of plan obligations to soar, while the plunge in the equities market has resulted in steep falls in the value of plan assets.

The broader jobs bill still is under discussion. Senate Democratic leaders had wanted to bring the measure to the full Senate by the end of the week, but due to record snowfalls in Washington, few legislators now are in the city.

“We have been expecting an extension of the COBRA subsidy, and the Senate could well pass a bill by next week, if the weather permits,” said Frank McArdle, a consultant with Hewitt Associates Inc. in Washington.