The DOL’s Employee Benefits Security Administration (EBSA) has posted on its website new guidance regarding the COBRA health insurance premium subsidy granted by the American Recovery and Reinvestment Act of 2009 (“ARRA” or “Economic Stimulus”). Under ARRA’s COBRA provisions, the government provides certain qualifying unemployed workers with a 65 percent subsidy of their health insurance premiums for up to nine months. Those individuals who first became eligible to receive this subsidy will begin to lose their coverage starting this month.

The guidance is provided in a question and answer format, and addresses two common questions about an individual’s eligibility for the ARRA premium assistance. In response to the first inquiry, the EBSA explains that an employee who is involuntarily terminated this year but would not become eligible for COBRA coverage until on or after January 1, 2010 would not be entitled to the premium assistance under ARRA, as this law requires that an assistance eligible individual be “a qualified beneficiary as the result of an involuntary termination that occurred during the period from September 1, 2008, through December 31, 2009, is eligible for COBRA continuation coverage at any time during that period, and elects the COBRA continuation coverage.” Therefore, an individual who does not become eligible for COBRA until after December 31, 2009 would not meet this criteria. The EBSA explains in response to the second inquiry that an assistance eligible individual who is involuntarily laid off and qualifies for COBRA coverage before 2010 is entitled to the full nine months of premium assistance.

The EBSA notes, however, that these responses are based on current law, and thus do not take into consideration pending legislation. A number of bills have been introduced this year that would extend COBRA coverage. The latest such bill was introduced last month by Senators Sherrod Brown (D-Ohio) and Robert Casey (D-Pa.). Their bill, the COBRA Subsidy Extension and Enhancement Act of 2009 (S. 2730), would extend the COBRA subsidy deadline by six months, as well as increase the amount of the subsidy and the number of individuals who would be able to take advantage of this program. This measure has been referred to the Senate Committee on Health, Education, Labor and Pensions. A COBRA continuation bill was also introduced by Rep. Sestak (D-Pa.), although this bill, the Extended COBRA Continuation Protection Act of 2009 (H.R. 3930), would keep the subsidy at 65 percent. COBRA extension could also be included in a new jobs bill package under consideration, however, final action on a jobs bill or other COBRA continuation proposals may not come before the end of the year. Should legislation extending COBRA coverage be enacted, the EBSA guidance would necessarily be amended.

This entry was written by Jay Sumner and Ilyse Schuman.

Photo credit: Andriy Solovyov