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President Signs Law to Extend COBRA Subsidy, Jobless Benefits

By Bill Leonard  12/21/2009
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President Barack Obama signed legislation into law on Dec. 19, 2009, extending for six months a federal subsidy to help unemployed workers acquire health insurance through their former employers’ health care plans. The law takes effect immediately.

Earlier that day, the U.S. Senate approved the measure. The House of Representatives had voted for it on Dec. 16, 2009. The new law provides an extra six months of federal subsidy payments that allows unemployed workers to purchase health care coverage guaranteed by the Consolidated Omnibus Reconciliation Act, better known as COBRA. The new law extends eligibility for the subsidy program for two months. The extension was added to the Department of Defense spending package (H.R. 3326), which passed the House and Senate by overwhelming margins.

In addition, the spending bill included an amendment that will provide an additional 13 to 20 weeks of unemployment benefits to American workers. Unemployment insurance benefits will increase by $25 a week as a result of the change.

The COBRA subsidy is a high-profile issue given the heated debate continuing on health care reform.

“This bill ensures that workers who have lost their jobs through no fault of their own will not lose the unemployment and health benefits they rely upon to provide for their families,” said Rep. Charles Rangel, D-N.Y., chair of the House Ways and Means Committee.  “The immediate benefits and assistance provided in this bill help provide some measure of economic security for millions of our fellow Americans struggling during this holiday season, helping ease their pain as they search for their next job opportunity.”

The new law extends the duration of the COBRA premium subsidy payments from nine to 15 months. The law changes the eligibility of date for the program from Dec. 31, 2009 to the end of February 2010. According to the law, workers who are laid off from their jobs on or before Feb. 28 can qualify to receive the subsidy payments.

The eligibility deadline and duration of the subsidy payments have created some confusion for employers who must notify laid-off employees about the program and then track and verify that workers are eligible to receive the subsidy. The subsidy was part of the federal stimulus package that was enacted in February 2009 and pays 65 percent of the monthly health insurance premiums for COBRA-provided coverage. Subsidy payments began running out for unemployed workers on Dec. 1, 2009, which compounded confusion over the program as media reports stated that the COBRA subsidy was expiring on that date.

Jobs Bill Approved Narrowly

A similar extension to the COBRA subsidy was included in a jobs creation bill (H.R. 2847), which was also approved by the House on Dec. 16, 2009. The jobs legislation passed by the narrow margin of 217-212 and now moves on to the Senate. Senate leaders have stated that they will not begin debate on the proposal until January 2010.

The measure combined $50 billion in spending for public works and infrastructure projects with another $50 billion in aid to states and local governments, which are facing major budget deficits.

Republican leaders in the House denounced the proposal, calling it “the son of stimulus” and stated that the federal government could no longer afford to support its deficit spending habits.

“More spending, more debt, and the same lousy policies that haven’t produced jobs all year,” House Minority Leader John Boehner, R-Ohio, told reporters after the bill passed.

No Republicans voted for the measure and 38 Democrats joined with the GOP members to cast dissenting votes.

Bill Leonard is senior writer for SHRM.

Related Article: 

Subsidy for Health Coverage Creates Confusion, HR News, December 2009


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