COBRA Subsidy Extension Enactment Requires Quick Action, Shows Subtle Reform Enactment While Health Care Reform Debate Continues

Congress’ quiet extension of the COBRA subsidy rules for involuntarily terminated employees and their dependents beyond their scheduled 12/31/09 expiration date and lengthening of the required subsidy period from 9 to 15 months shows that the big health care reform debate is not the only legislation Americans and American business needs to watch. (You can learn more about the COBRA Subsidy extension mandates at http/ / ).

Through enactment of this legislation and other recently enacted and proposed employment leave and health plan continuation rules, Congress already is expanding the groups of individuals that employers are required to cover and thereby broadening the reach of the mandates to come in larger health care reform legislation. Since the 35% premium limit often is substantially less than currently enrolled employees pay for coverage, it comes as no surprise that data shows that as a result of the COBRA Subsidy Rules, COBRA enrollment is higher than ever before.

In the meantime, employer and union sponsored group health plans, their sponsors and administrators must act quickly to provide required notifications and implement other plan document and procedural changes required to comply with the extension and expansion of temporary “COBRA Subsidy Rules” for “assistance eligible individuals” signed into law as part of the Department of Defense Appropriations Act (H.R. 3326).

The COBRA Subsidy Rules originally were added to the group health plan medical coverage continuation requirements of the Consolidated Omnibus Budget Reconciliation Act of 1985, as amended (“COBRA”) by the American Recovery and Reinvestment Act of 2009 (“AARA”) last February.
H.R. 3326 extended the period that employer and union-sponsored group health plans must allow employees and members of their family that lose group health plan coverage due to an involuntary employment loss to continue their group medical coverage under the reduced premium and other temporary ARRA COBRA Subsidy Rules and lengthened the period during which an involuntary employment loss can qualify an otherwise COBRA-eligible employee or dependent as an assistance eligible individual. Health plan administrators must provide notifications to assistance eligible individuals and restore COBRA eligibility and coverage at reduced premiums for certain assistance eligible individuals who allowed their coverage to lapse before the extension.

Even as this extension takes effect, Congress is considering legislation that would further reduce the premiums health plans are allowed to charge and extend the COBRA Premium rules to June, 2010.

Like the already-enacted school leave mandates for dependent children requiring school medical leaves, military services related expansions to the Family Medical Leave Act and the host of other proposed mandated leave laws that also would mandate continued health coverage, few anticipate that these eligibility mandates, once enacted will go away when the bigger health care reforms come to pass.

Bottom line: Americans have to keep their eye on a bigger game than just the big health care reform debate.  In the meantime, the law increasingly requires that U.S. businesses already struggling to pay health care costs and keep businesses afloat to treat the terminated employees – including those fired for poor performance –  better than the hard working employees that show up every day to help fight the fight.

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©2009 Cynthia Marcotte Stamer. All rights reserved.