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COBRA subsidy may be extended

The Obama administration is seeking to extend the subsidy of COBRA premiums.   Currently, many employees who were laid off between September 2008 and February 2010 receive a 65 percent subsidy of their health care coverage for up to 15 months.  The President’s budget proposal would extend that subsidy to employees who lose their jobs in 2010 as well.   

Only laid-off workers who cannot get coverage under another group health plan, like a spouse’s plan or Medicare, are eligible for the subsidy. The premium assistance is available for individuals whose income is under $145,000 and for families filing jointly with incomes under $290,000. The subsidy phases out for those earning more than $125,000 (or $250,000 for families).

According to a December study of large employers by the benefits consultant Hewitt Associates, average monthly enrollment rates have increased by 20 percentage points since the subsidy was enacted in March 2009. In the six months before enactment, an average of 19 percent of eligible workers enrolled in Cobra each month. During the nine months after the subsidy became law, that figure increased to 39 percent of eligible employees.

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