Legislative efforts to extend the expired COBRA premium subsidy have been derailed, and it’s not clear when or whether the legislation can be revived. Concern about the cost of the subsidy at a time of ballooning federal budget deficits prevailed over attempts by some lawmakers to extend the subsidy through the end of the year.
Subsidy expired May 31
In mid-April, President Obama signed the Continuing Extension Act, which extended eligibility for the COBRA subsidy for workers involuntarily terminated between April 1 and May 31 (see Insider, May 2010). At that time, Congress was expected to extend the subsidy (again). Lawmakers had already extended the COBRA subsidy three times; the Senate had approved legislation to extend subsidy eligibility through December 31; and Ways and Means Committee chair Sander Levin (D-Mich.) had expressed support for an extension. A tax extenders bill slated for debate before Congress’ Memorial Day recess was expected to serve as the vehicle for the fourth extension.
On May 20, Representative Levin and Senate Finance Committee chair Max Baucus (D-Mont.) unveiled the American Jobs and Closing Tax Loopholes Act (H.R. 4213), which would have extended the COBRA subsidy through December 31. But concern about the deficit forced Representative Levin to reduce the bill’s overall cost. In the first round of cuts, he shortened the duration of the extension — ending it November 30 rather than December 31. But he had to cut deeper to ensure House passage of the bill and so dropped the COBRA subsidy extension altogether. The House approved the American Jobs and Closing Tax Loopholes Act on May 28, and the subsidy expired during Congress’ Memorial Day recess.
Proposals to reinstate subsidy
The Senate began debating the American Jobs and Closing Tax Loopholes Act in early June. Senators Bob Casey (D-Penn.) and Sherrod Brown (D-Ohio) offered an amendment to reinstate the COBRA subsidy through November 30.
As the Independence Day recess approached, however, the Senate was unable to garner the 60 votes required to overcome opposition to the act. So the Senate voted on the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act instead. On June 25, President Obama signed the act into law, thereby delaying reductions to Medicare’s physician reimbursement rates and making pension funding relief available. On June 29, Senators Casey and Brown introduced their COBRA amendment as a stand-alone bill: the Extend COBRA Premium Assistance Program Act (S. 3548).
Next steps
The Senate returned from the Independence Day recess on July 12. House and Senate Democrats plan to focus on jobs and unemployment issues up to the August break. On July 22, President Obama signed an extension of unemployment benefits, but the COBRA subsidy was not included. As Congress enters its August recess and prepares for the November elections, House and Senate Democrats hope to keep their focus on legislation that will create jobs and assist the unemployed, a focus that could set the stage for further action on the COBRA subsidy.
It is not clear, however, whether Senator Casey and other subsidy supporters can overcome the growing reluctance to add to the budget deficit. Another obstacle is the clock. Not much time remains in this legislative session for the House and Senate to reach agreement and pass legislation. Although supporters of COBRA subsidies will continue their push, it could become increasingly difficult to restart a program that has been expired for several months, especially as a contentious election season heats up.
Copyright 2012 Towers Watson. All rights reserved.