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COBRA subsidy extension removed from jobs bill


WASHINGTON—Senate Majority Leader Harry Reid, D-Nev., on Thursday scrapped a bipartisan jobs bill that included provisions to extend and expand federal COBRA premium subsidies to laid-off employees, as well as temporarily ease pension plan funding rules, in favor of a narrower measure that he intends to bring to the Senate floor soon.

Benefit experts say there is overwhelming congressional support to extend COBRA premium subsidies and that the COBRA provisions in the scrapped bill are likely to be attached to any one of several other bills that Congress will consider in the coming weeks.

“The COBRA provisions remain uncontroversial, and instead of going out on this train, they may go out on the next train. Employers should expect the subsidy to be extended,” said Frank McArdle, a consultant with Hewitt Associates Inc. in Washington.

Under the original jobs bill—unveiled in draft form but never formally introduced by Senate Finance Committee Chairman Max Baucus, D-Mont., and Sen. Charles Grassley, R-Iowa, the panel's ranking minority member—the current COBRA premium subsidy provided to involuntarily terminated employees would have been extended by 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 due to a reduction in the number of hours they work and were involuntarily terminated later to receive the COBRA premium subsidy, assuming certain conditions were met.