Six-Month COBRA Extension Eyed
June 22, 2010 – Senate Majority Leader Harry Reid is closing in on the 60 votes he needs to approve a tax measure that would include a provision extending the federal COBRA health insurance subsidy another six months.
The American Jobs and Closing Tax Loopholes Act of 2010 likely will include an amendment extending the federal health insurance subsidy through November. The proposed six-month extension is nine months less than the prior 15-month extension turned down due to budgetary concerns. But Senate Majority Leader Harry Reid has not been able to come up with the 60 votes necessary to bring the measure to a floor vote in the U.S. Senate and suffered two setbacks in attempting to do so last week.
The federal COBRA health insurance subsidy expired June 1, and the measure would extend the qualifying period through November and prevent about 150,000 Americans each month from losing their health insurance benefits, according to the National Employment Law Project.
The proposed amendment likely is a response to President Barack Obama earlier this week urging federal lawmakers to extend funding for the expired federal program helping unemployed Americans maintain their group health insurance coverage. But extending the program means funding it. Federal lawmakers resumed session June 7, but no funding extension had been proposed.
The federal COBRA health insurance subsidy helping unemployed Americans maintain their group health insurance benefits expired after Senate Democrats adjourned session before Memorial Day without authorizing additional program funding. The federal COBRA health insurance law allows laid-off and unemployed Americans to pay their employer’s prior group health insurance premium and remain insured for up to 18 months after losing their jobs. The COBRA subsidy was approved as part of the $787 billion federal stimulus package last year and paid the health insurance premium previously paid by job providers so unemployed Americans wouldn’t automatically lose their families’ health insurance protection.
About a third of eligible Americans used the federal subsidy at an annual cost of about $13,000 per family, according to the U.S. Treasury Department. But the subsidy was allowed to expire after Senate Majority Leader Harry Reid (D-Nevada) last month announced the Senate would recess and wouldn’t take up measures extending the program until at least June 7.
American families who recently lost their primary incomes due to unemployment have seen their average monthly health insurance benefits payments rise from about $389 per month while employed to $1,111 per month if choosing to continue them through COBRA, according to the non-profit Families USA organization. A monthly health insurance premium of $1,111 uses up about 83 percent of the average monthly unemployment take-home benefits of about $1,332, according to Families USA.
Maintaining group health insurance benefits is expensive, costing an average $400 per month for an individual and $1,100 per family to maintain prior group health insurance benefits provided while previously employed, according to the Kaiser Family Foundation. Americans who began receiving the subsidy between September 2008 and March 2009 will be the first to lose their benefits.
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