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COBRA Expansion Approved by House Panel

January 23, 2009
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Employers would have to extend COBRA health care continuation coverage for older employees and longer-service employees until they are eligible for Medicare under legislation approved Thursday, January 22, by a House panel.

The COBRA provisions, tucked into the $825 billion economic stimulus package approved by the Ways and Means Committee, would be a huge expansion of the 1986 law that now gives employees who terminate employment the right to continue health insurance coverage from their former employers for 18 months by paying a premium equal to 102 percent of the cost of coverage provided to employees.

Under the measure, employees who stop working as young as age 55 could keep COBRA coverage until they were eligible for Medicare at age 65, regardless of the amount of time they worked for the employer. And any employee who worked for an employer for at least 10 years also could keep COBRA until eligible for Medicare.

In addition, the legislation, which was approved on a partisan 24-13 vote, would provide employees who are laid off between September 30, 2008, and December 31, 2009, a 65 percent federal COBRA premium subsidy for 12 months.

Committee member Ginny Brown-Waite, R-Florida, spoke in opposition to the expansion, warning that the claims costs of older beneficiaries could be close to double the premium they pay their former employers, adding thousands of dollars in health care costs per beneficiary to employers.

That could lead more employers to drop health insurance coverage, she said.

Business groups said such an expansion of COBRA would change the nature of the program. “The purpose of the COBRA program is not, and should not be, to provide long-term or permanent coverage,” Mark Ugoretz, president of the ERISA Industry Committee, wrote in a letter sent to federal legislators before the panel vote.

The full House is expected to take up the stimulus bill next week.

(For more, read "Obama Asks Workers and Businesses to Serve and Sacrifice.")

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

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