COBRA Subsidies Set to Expire

Congress is debating a bill that would extend COBRA subsidies to June 30 and apply it to workers laid off between January 1 and June 30 of next year and allow workers to keep coverage for two years.

Unemployed workers are generally able to continue their company-provided health insurance under COBRA, which lets them hang on to their coverage for 18 months, as long as they pay the premiums. Premiums for what are often benefit-rich policies can be steep, however, running an average of $13,375 a year for a family and $4,824 for an individual. Faced with an express-train increase in unemployment, Congress acted earlier this year to provide the jobless with a subsidy toward those premiums.

Under the law, employees who are involuntarily terminated can get a subsidy of 65% of their health insurance premiums under COBRA. Workers who are laid off between September 1, 2008 and December 31, 2009 are eligible for the subsidy, and since the program took effect on March 1, the number of employees covered under COBRA plans has doubled. Unless Washington lawmakers act before December 31, however, the subsidies will end and those covered under the program will see a huge jump in their premiums.

A bill introduced in Congress would extend the COBRA subsidy program to June 30 and apply it to workers laid off between January 1 and June 30 of next year. In addition, the bill would allow terminated workers to keep their COBRA coverage for two years, up from the current 18-month limit. If the bill fails, say consumer advocates, those covered under COBRA may have little choice but to look for cheaper coverage. Even so, some experts advise program participants, especially those with pre-existing conditions, to stay on COBRA if they can possibly afford it.