Senate and House pass H.R. 3326, Defense Appropriations Bill

December 21, 2009

COBRA Subsidy Extension Provisions Included in House-Passed Defense Appropriations Bill

On Saturday the Senate passed H.R. 3326, the Defense Department appropriations bill. The bill contains several key health-related provisions, including an extension of the federal subsidy of COBRA and state continuation benefits created last spring by the American Reinvestment and Recovery Act of 2009 (ARRA). The nine-month 65% subsidy of COBRA premiums for involuntarily terminated workers and their dependents, which is generally advanced by the employer and reimbursed through a federal payroll tax credit, was set to expire on December 31, 2009. H.R. 3326 would not only extend the length of the subsidy from nine months to 15 months, but it would also change the eligibility date for the subsidy from December 31, 2009 to February 28, 2010.

The COBRA subsidy extension provisions are not yet law, but H.R. 3326 has been passed by both the House and the Senate is expected to be signed quickly by President Obama. It is expected that if this extension is enacted, the federal Departments of Labor and Treasury will issue guidance about how to handle the transition of individuals who have gone off the original nine-month subsidy, as well as the newly-eligible populations - those who have a January 1, 2010 or later COBRA eligibility date, thereby rendering them ineligible for the subsidy under current law. NEEBCo will continue to keep our clients informed of any changes to the subsidy requirements as they develop.

In addition to the COBRA provisions, the defense bill also contained a two-month freeze on Medicare physician payment rates. If enacted, this provision of the bill would prevent a scheduled 21% cut in Medicare provider reimbursement rates from taking place on January 1, 2010. This bill also contains language to extend three Unemployment Insurance provisions through February 2010.

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