Health Insurance Continuation Coverage Under COBRA Page: 4 of 14
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Health Insurance Continuation Coverage Under COBRA
Title III of the American Recovery and Reinvestment Act (ARRA; P.L. 111-5) included a
temporary 65% subsidy for COBRA premiums. The subsidy is available for up to nine months to
individuals who meet the income test and are involuntarily terminated and eligible for COBRA
coverage on or after September 1, 2008, and before January 1, 2010. For more information, see
CRS Report R40420, Health Insurance Premium Assistance for the Unemployed: The American
Recovery and Reinvestment Act of 2009, coordinated by Janemarie Mulvey.
On December 16, 2009, the House passed two versions of a COBRA subsidy extension. An
amendment to the Senate amendment to H.R. 3326, Defense Appropriations for FY 2010, extends
eligibility for the COBRA subsidy to include individuals who are involuntarily terminated
between January 1, 2010 and February 28, 2010. The House also passed an amendment to the
Senate amendment to H.R. 2847, the Departments of Commerce and Justice, and Science
appropriations bill, which extends eligibility for the COBRA subsidy to include individuals who
are involuntarily terminated between January 1, 2010, and June 30, 2010. Both bills extend the
period of time the COBRA subsidy is available from nine to 15 months. And under both bills,
generally individuals who are eligible for the extended coverage but allowed their COBRA
coverage to lapse when the original COBRA subsidy expired are given 60 days from the date of
enactment to pay back premiums. Eligible individuals who continued to pay for coverage when
the original subsidy lapsed can receive a credit or refund of 65% of the paid premiums.
Title X of the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA; P.L. 99-272)
requires employers who offer health insurance to continue coverage for their employees under
certain circumstances. Congress enacted the legislation to expand access to coverage for at least
those people who became uninsured as a result of changes in their employment or family status.
Although the law allows employers to charge 102% of the group plan premium, this can be much
less expensive than coverage available in the individual insurance market. The law affects private
sector employer group health plans through amendments to the Employee Retirement Income
Security Act (ERISA) and the Internal Revenue Code. COBRA continuation coverage for
employees of state and local governments is required under amendments to the Public Health
Service Act. Continuation coverage similar to COBRA is provided to federal employees and
employees of the Washington, DC, district government through the law authorizing the Federal
Employees Health Benefits program under Title 5 of the U.S. Code.
Before enactment of COBRA, if an employee's job was terminated (voluntarily or involuntarily),
the insurance offered by the employer also ceased, usually within 30 to 60 days. Women were
especially vulnerable to loss of insurance coverage if they became unemployed, widowed, or
divorced. Although some employers offered the option of buying into the group plan, there was
no certainty of that option. In 1985, 10 states had laws requiring insurance policies sold in their
states to include a continuation of coverage option for laid-off workers. However, self-insured
employers (employers that assume the risk of the health care costs of their employees rather than
using private insurers) were not regulated by these state-mandated benefit laws; self-insured plans
were regulated at the federal level under ERISA. Health insurance coverage for these affected
workers and their families was not consistently available.
Congressional Research Service
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Kinzer, Janet & Peterson, Meredith. Health Insurance Continuation Coverage Under COBRA, report, December 18, 2009; Washington D.C.. (https://digital.library.unt.edu/ark:/67531/metadc819130/m1/4/: accessed June 24, 2021), University of North Texas Libraries, UNT Digital Library, https://digital.library.unt.edu; crediting UNT Libraries Government Documents Department.