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Congress Lengthens COBRA Subsidy

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WASHINGTON–Congress finally approved legislation last night extending the 65% percent subsidy the unemployed can use to pay for health insurance under the Consolidate Omnibus Budget Reconciliation Act program.

The provision is effective until May 31.

The provision extending COBRA and unemployment benefits until June 2 was contained in H.R. 4851, “The Continuing Extension Act of 2010.”

The bill also extends current Medicare payment rates for physicians through May 31, 2010, thus preventing a 21% payment reduction.

The House passed the bill, 289-112, after the Senate passed the bill in late afternoon, 59-38. The president signed the bill within an hour of when the House passed it.

The short-term extension of the programs was based on the goal that Congress complete work before the Memorial Day recess on a so-called tax extender’s bill that will include longer-term extensions of these programs, according to various industry officials.

The bill signed by the president Thursday night was originally passed by the House several weeks ago, but it had to be returned to the House after an amendment sponsored by Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee, extended the expiration dates for the various programs from the end of April.

That would have forced Congress to pass another extension before the end of the month or see the programs lapse again.

The American Benefits Council issued a statement that it hoped the bill now being worked on will include provisions providing funding relief for defined benefit pension plans.

The ABC cited recent support for such relief from the Obama administration through a letter sent April 13 by Hilda Solis, secretary of the Department of Labor, to Rep. Sander Levin, D-Mich., chairman of the House Ways and Means Committee, and Rep. George Miller, D-Calif., chairman of the House Education and Labor Committee.

“Secretary Solis’ recent letter to Congress leaders affirms what council members have said for months: immediate funding relief is essential to the preservation of thousands of American jobs and continued economic recovery,” said James Klein, ABC president.

Beginning in 2008, an unprecedented “perfect storm” of depressed financial markets, low interest rates and new pension funding rules artificially inflated companies’ defined benefit pension obligations, Klein said.

“Millions of dollars that would normally go toward job creation and capital investment are being diverted to healthy pension funds,” he said. “A company’s pension funding level is measured on a ‘snapshot’ point in time. But pension sponsors need to make up their losses over an extended period, corresponding to the long duration of pension promises.”

Klein noted that in March the Senate passed relief legislation as part of the American Workers, State, and Business Relief Act.

The House of Representatives Ways and Means and Education and Labor Committee committees are negotiating a legislative package for consideration within the next several weeks.

Solis’ letter sets forth a number of principles for the development of such legislation, including numerous conditions on companies that choose to utilize the relief, according to Klein.

“Relief is urgently needed now, without restrictions that would limit its effectiveness or create obstacles to economic recovery,” Klein said.


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