Members of the Senate voted 62-36 Wednesday to pass H.R. 4213, a bill that includes a COBRA subsidy extension provision and defined benefit pension plan funding provisions.

The final version of the COBRA and pension provisions were added in the form of a major amendment to H.R. 4213, the $130 billion American Workers, State and Business Relief Act.

Sen. Max Baucus, D-Mont., introduced the amendment.

H.R. 4213 must now be reconciled with a similar bill with the same number–the Tax Extenders Act of 2009–that passed the House last December.

About $80 billion of the bill’s total appropriations will be used to prolong federal unemployment aid and the 65% health benefits continuation subsidy now available under the Consolidated Omnibus Budget Reconciliation Act. The legislation makes the extra unemployment aid and the COBRA subsidy available through Dec. 31.

The Senate measure also extends the current Medicare payment rate for doctors; without the extension, Medicare doctors would see their pay drop 21%. The bill also would allocate $25 billion to states to help them fund their Medicaid programs for another 6 months.

Pension Funding Relief

The Senate also adopted an amendment that provides for pension funding relief, which, along with the underlying funding provisions included in jobs legislation, is intended to save jobs by allowing companies more time to repay losses incurred by pension plans in 2008.

The funding relief amendment to H.R. 4213 was a bipartisan product sponsored by Senators Johnny Isakson, R-Ga., and Benjamin Cardin, D-Md.

Cardin notes in a prepared statement that the legislation will encourage companies to continue their defined benefit programs by affording them greater flexibility to manage their pension obligations.

“Defined benefit plans are an important part of retirement planning and it is important to ensure the viability of the pension security system and to give retirees the benefits they have been promised,” says Cardin. “This amendment provides temporary support for companies facing difficult economic challenges. And it will ensure that workers have the resources they need in retirement.”

Under the main provision of the amendment, employers would be allowed to choose from two options to spread out their pension obligations. Under the first, employers can repay their pension shortfall over 7 years, but the 7-year amortization would start 2 years late.

During the 2-year delay, the employer would only owe interest on the shortfall. Under the second option, employers could repay their pension shortfall over 15 years.

The amendment also removes a punitive provision that would impose an unfair burden on companies. And it lends flexibility to the funding of benefits for union-managed, multi-employer plans.

“This legislation, as amended, would enable companies to invest in business recovery and job retention instead of contributing enormous amounts on behalf of pension liabilities that will not come due for many years,” says James Klein, president of the American Benefits Council, Washington, a group that represents large benefit plan sponsors.

But Klein says the benefits council remains concerned about the conditions that the Senate bill attaches to single-employer funding relief.

“The council strongly believes more needs to be done to address unpredictability in the funding rules,” Klein says.