COBRA Subsidy Extension Continues

January 25, 2010

If you’re currently using the existence of COBRA health insurance law to maintain insurance coverage after you’ve been laid off or fired, you’ll be glad to know that Congress ended weeks of uncertainty in late December, giving final approval to President Obama to sign into law a Department of Defense bill that included provisions to extend COBRA premium subsidies.

According to an article at, the measure, H.R. 3326, extended a 65% premium subsidy, originally established via an economic stimulus measure passed early in 2009, by six to fifteen months for employees who were “involuntarily terminated” from their jobs between September 1, 2008 and December 31, 2009. In addition, any workers who lose their jobs before February 28, 2010 will also be eligible for a 15-month subsidy. Without the extension, employees terminated after December 31st, 2009 would not have been eligible.

The extension of the subsidy is expected to offer significant financial relief to employees who lose their jobs and group health insurance during the first two months of this year, as well as the many workers who have already collected the subsidy for the past nine months, and were no longer eligible or were about to lose their eligibility to receive it.

Representative Joe Sestak (D – Pennsylvania) said in a statement to the press, “Losing one job’s is difficult enough. But losing one’s health care along with it and worrying about being able to get treatment for oneself and one’s family, or fearing bankruptcy in the event of injury or illness is something Americans should not have to cope with in this difficult time.” Sestak had previously introduced a COBRA premium subsidy extension measure, part of which was included in the military spending bill passed in December.

This new COBRA subsidy extension may not be the last such extension, however, especially if unemployment numbers continue to remain high. While statistics on how many laid-off employees are taking the subsidy is not available, a congressional Joint Committee on Taxation report, generated after approval of the original subsidy, contained estimates that about 7 million workers and their families would benefit, at a total cost of $25 billion. Another survey found that COBRA enrollment rates surged after the creation of the subsidy, with opt-in rates nearly doubling as a result.

From September 1, 2008 – February 28, 2009, roughly 19% of involuntarily terminated employees were enrolled in COBRA. In contrast, from March 1, 2009 when the subsidy became available, through November 30, 2009, the original expiration date, enrollment rates were averaging about 39%.

The subsidy reduces insurance premiums from roughly $400 (for an individual) to $1200 (for a family) to $260 (for an individual) to $780 (for a family) – a significant savings for people who no longer have a regular source of income.