COBRA relief for unemployed awaits action in Senate

Slowly but surely, the Pennsylvania General Assembly appears to be moving legislation to help workers laid-off by small employers keep their health insurance.

When an employee is laid off, federal law requires employers to offer the opportunity for the employee to continue the employer-based health insurance s/he (and dependents) enjoyed before being laid off.  Under the stimulus bill passed by Congress earlier this year, federal subsidies will pay 65 percent of the premium cost, thus making the insurance more affordable for the laid-off workers.

Known as COBRA, this protection only applies when the employer has 20 or more employees.

Pending before the legislature are two bills (SB 442 and HB 1089) that would apply these same protections to employees laid-off by employers with fewer than 20 employees.  The Senate passed SB 442 April 1st; since then the bill has been awaiting acction in the House Insurance Committee.  The House passed HB 1089 on April 22nd; since then the bill has been approved by the Senate Banking and Insurance Committee and now awaits action in the Senate Appropriations Committee.

Capitol insider expect the Senate to complete work on the House bill promptly after the Senate's return to Harrisburg June 1.

The legislature in our neighboring state - Ohio - finished this same work back in April. As a result, workers laid off by small employers in that state have already begun receiving subsidies.

Here is how the federal subsidy works.  The laid-off worker who is covered under a state mini-COBRA law pays 35 percent of the premium for the health coverage s/he received before being laid off.  S/he makes the payment to the administrator of the health plan, who sends it on to the insurer.  The insurer accepts that partial amount as payment in full, and at the end of the quarter, receives a tax credit from the federal government for the 65 percent balance.

In summary, small employers would not be impacted in any way by SB 442 or HB 1089.  Health insurers would bear the impact for a maximum of 90 days, after which they would be made whole by the federal government.

This is important protection for laid-off workers and for the economy of Pennsyvlania.  Urge your senator to move this bill to final passage as soon as possible.