Legislation has been introduced in the House of Representatives that would extend the period of health benefits under the Consolidated Omnibus Budget Reconciliation Act (“COBRA”) for certain employees and that would extend the government subsidy available for such coverage under the American Reinvestment and Recovery Act of 2009 (“ARRA”).

Under COBRA, employees and their families who lose their health benefits have the right to choose to continue group health benefits provided by their employer for a limited period following a qualifying event, such as a job loss, reduction in hours worked, loss of dependent status, death, or divorce. Qualified individuals who elect COBRA may be required to pay the entire cost of coverage, plus a 2% administrative fee.  Under ARRA, “assistance eligible individuals” who are both involuntary terminated and become eligible for COBRA on or before December 31, 2009, pay only 35% of what they would otherwise be required to pay for COBRA coverage for a period of up to 9 months.  The government reimburses the employers or insurers the remaining 65% through a payroll tax credit.

Under H.R. 3966, ARRA would be amended to extend this 65% subsidy for assistance eligible individuals who are involuntarily terminated and who become eligible for COBRA before June 30, 2010 (as opposed to December 31, 2009).

Under H.R. 3930, individuals who are involuntarily terminated between April 1, 2008 and December 31, 2009 would be entitled to continue group health benefits under COBRA for a period of 24 months. Currently, such individuals can continue coverage for up to 18 months.  If a qualified individual’s coverage has already expired by the time the legislation is enacted, the individual would have the right to elect COBRA coverage for the additional 6 months.

Additionally, under H.R. 3930, ARRA would be amended to extend the 65% ARRA subsidy for assistance eligible individuals until June 30, 2010, and the subsidy would be available for up to 15 months or until December 31, 2010, whichever is sooner.

Both bills have been referred to the House committees on Education and Labor, Energy and Commerce, and Ways and Means.