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Senate Negotiators Revamp COBRA Subsidy Plan

February 9, 2009
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The federal government would pay 50 percent of COBRA health care premiums for up to 12 months for employees who are laid off from September 1, 2008, through December 31, 2009, under a massive economic stimulus bill the Senate is expected to vote on Tuesday, February 10.

Those COBRA premium provisions, agreed to over the weekend by a bipartisan panel of Senate negotiators, are a change from the provisions earlier approved by the Senate Finance Committee. Under that panel’s measure, the government would have provided a 65 percent premium subsidy, but the subsidy would have ended after nine months.

The total estimated cost of the revamped COBRA provision would be about $20 billion, compared with $25 billion in the Finance Committee bill. Numerous other provisions in the stimulus measure also were changed by negotiators to reduce the total cost of the package by about $100 billion to just more than $800 billion.

Under an economic stimulus bill passed earlier by the House of Representatives, the federal COBRA premium subsidy would be set at 65 percent and last for up to 12 months. That measure also would allow employees terminating employment after 10 years with one employer and those 55 and older to retain COBRA until eligible for Medicare at 65.

That broad COBRA eligibility expansion, lobbyists say, is not expected to win final congressional approval.

Filed by Jerry Geisel of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.

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