House Bill Would Expand COBRA Coverage

The Health Insurance for Unemployed Workers provision has three components;

• a new temporary subsidy for COBRA (Consolidated Omnibus Budget Reconciliation Act) premiums to enable people who have been involuntarily terminated from their jobs to maintain the coverage they had through work,
• new options for states to extend healthcare to unemployed workers through Medicaid, and
• an extension of COBRA eligibility (without subsidies) for long-term employees and older workers.

According to a  summary of the Health Insurance Assistance for the Unemployed Act of 2009 posted on the House Ways and Means Web site, the Congressional Budget Office (CBO) estimates that this package would help nearly 8.5 million people keep coverage for themselves and their families.  Last week published reports suggested that both Senator Max Baucus (D-Montana) and President-elect Obama had alluded to the initiative (see  Congress Pondering Federal COBRA Subisdy ,  Obama Jobless Benefit Expansion Funded by Employer Payments ). 

Under current law, COBRA provides for continued health coverage through a previous employer’s health plan for up to 18 months for most people, but they must pay 102% of the cost of that coverage.

First Option

Regarding the first option, the bill provides a 65% subsidy for COBRA continuation premiums for up to 12 months for workers who have been involuntarily terminated (and their families).   According to the Ways and Means summary, the subsidy also applies to health care continuation coverage if required by states for small employers.   To qualify, a worker must be involuntarily terminated between September 1, 2008 and December 31, 2009.   Workers who were involuntarily terminated between September 1, 2008 and enactment, but failed to initially elect COBRA within 60 days as required by law, would be given an additional 60 days to elect COBRA and receive the subsidy, but only on a prospective basis.   The subsidy would terminate upon offer of any new employer-sponsored health care coverage.

The Medicaid provisions of the bill provide states the option of offering coverage to unemployed workers through their Medicaid programs, with the federal government matching 100% of the costs of benefits and administration. States could offer coverage to individuals who are unemployed and uninsured and fall into one or more of the following three categories:

(1) individuals (and their dependents) who receive unemployment insurance benefits or who have

exhausted unemployment insurance benefits;

(2) individuals (and their dependents) who have income below 200 percent FPL ($42,400 for a family of 4) and are not otherwise eligible for Medicaid or CHIP;

(3) individuals (and their dependents) receiving food stamps who are not otherwise eligible for

Medicaid or CHIP.

In all cases, the individual must be involuntarily separated from employment between September 1, 2008 and December 31, 2010 and remain unemployed.

Finally, separate from the short-term subsidy for involuntarily terminated workers cited above, COBRA-eligible workers who are 55 and older, or have worked for an employer for 10 or more years, would be able to retain COBRA coverage, at their own expense, until they become Medicare eligible at age 65 or secure coverage through a subsequent employer.