Congress Settles on COBRA Changes

Congress reached agreement yesterday on the final terms of the Economic Stimulus Package. As you know, the House and Senate bills contained an expansion of COBRA rights for individuals who lose their jobs or are laid off on or after September 1, 2008 and before December 31, 2009.

Based on information obtained from House Speaker Pelosi’s office, employers will subsidize 60% of COBRA premiums for the first nine months of COBRA coverage. To offset the employer’s expense, the employer may take full tax credit for its expenditures out of its payroll taxes including both income tax withholding and FICA.

The House version of the premium assistance provisions also included additional “lifetime” (to 65) COBRA rights for tenured workers. However, the Senate bill did not. It appears that the additional lifetime COBRA (to 65) is not included in the final bill.

We have prepared a detailed overview of the premium assistance provisions which we will publish once we have confirmation of the full provisions of this new legislation.

It is important to note that the bill also contains significant Medicaid funding. Earlier in the month Congress enacted the Children’s Health Insurance Program Reauthorization Act of 2009. This new law places additional HIPAA special enrollment rights for individuals eligible for Medicaid including government subsidies toward the cost of participation in employers’ group health plans. This new law also requires employers to provide periodic reports to the federal government on plan participation.

We will publish details on this new law as well.

Copyright © 2009 Alfred B. Fowler, Attorney at Law. All Rights Reserved.
Reprinted with permission