President Obama Tuesday night signed into law legislation that provides a stopgap, 31-day extension of federal subsidies of COBRA health care premiums.

The measure was approved earlier Tuesday by the Senate on a 78-19 vote, while the House cleared it last week.

Under H.R. 4691, the 65%, 15-month premium subsidy for laid-off workers is extended to those involuntarily terminated from March 1 through March 31.

Without the extension, employees laid off after Feb. 28 would have been ineligible for the subsidy.

The measure also will allow employees to receive the subsidy if they first lost group coverage due to a reduction in hours and then were terminated after enactment of the legislation, if certain conditions are met.

Meanwhile, the Senate Wednesday will continue consideration of legislation, H.R. 4213, that would extend the premium subsidy to employees laid off through Dec. 31, 2010.

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COBRA health insurance premium subsidies would be extended and expanded under a new jobs bill being put together by Senate Majority Leader Harry Reid, D-Nev.

In its current version, the draft bill would extend the COBRA premium subsidy to involuntarily terminated employees another 10 months, so employees laid off through year-end would be eligible for the 65% subsidy for up to 15 months.

Without an extension, employees laid off after March 1 would not be eligible for the subsidy.

“There are people who are losing their jobs and they need the ability to buy insurance,” Sen. Reid said on the Senate floor Wednesday.

Separately, the Senate on Thursday may begin to consider H.R. 1586, which among other things, would extend the subsidy through March 28. That measure is considered a stopgap while federal lawmakers consider a longer extension.

“There is virtually no doubt that a longer extension will follow,” said Frank McArdle, a consultant with Hewitt Associates Inc. in Washington.

Sen. Reid’s draft bill also would allow employees who first lost group health insurance coverage due to a reduction in hours and then were involuntarily terminated to receive the COBRA premium subsidy, assuming certain conditions were met.

Other provisions in the draft bill would give employers more time to fund their pension plan obligations, something business groups have sought for more than a year. Without such relief, employers will face huge increases in contributions to their plans, which have been battered by low interest rates and the plunge in the equities markets.

It isn’t known when Sen. Reid will formally introduce the jobs bill. Previously, the Senate majority leader stripped the COBRA subsidy and other provisions from a prior jobs bill in favor of a more narrowly focused measure, which the Senate passed Wednesday. At the time, Sen. Reid said some of the provisions, like the COBRA subsidy, would be reinserted in a series of bills he would introduce at a later date.

Tags: COBRA subsidy, COBRA Subsidy 2010, COBRA Subsidy Expansion, COBRA Subsidy Extension

President Obama has signed a bill that extends federal COBRA health insurance premium subsidies for the unemployed.

The Senate, in a rare Saturday session, passed H.R. 3326 on an 88-10 vote. The measure—a military spending bill that the House passed earlier last week—includes a provision that extends the nine-month, 65% premium federal subsidy by six months. The change applies to those who are involuntarily terminated through Feb. 28, 2010.

Previously, employees who lose their jobs after Dec. 31 would have been ineligible for the subsidy.

The legislation also provides another six months of subsidized coverage for beneficiaries whose nine-month COBRA premium subsidy has run out.

In addition, the legislation gives beneficiaries whose subsidy expired and who didn’t pay the full premium the opportunity to receive retroactive coverage. For example, a beneficiary whose nine months of subsidized coverage ran out Nov. 30 and who didn’t pay the unsubsidized premium for December could pay his or her 35% share in January and receive COBRA coverage for December.

The legislation also requires employers to notify current and future COBRA beneficiaries of the new 15-month premium subsidy.

The fate of the legislation has been followed closely by terminated workers—eager to know whether the subsidy will be extended—as well as employers who need to tell beneficiaries the COBRA premium they should pay.

The legislation makes clear that employers can offset future COBRA premiums or issue refund checks for beneficiaries who overpaid their COBRA premium. That could happen if a beneficiary whose subsidy ran out in November paid the full premium rather than the 35% share in December.

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