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Senate Stimulus Bill Sweetens COBRA Subsidy

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What You Need to Know

  • The COBRA subsidy would last only through September.
  • Another subsidy, for unemployed people, would last throughout 2021.
  • The emergency measures could influence future health system change efforts.

The Senate has increased the generosity of a health insurance subsidy provision in H.R. 1319, the American Rescue Plan Act of 2021.

The “Preserving Health Benefits for Workers” provision would help insured workers who lose their jobs keep their employer-sponsored group health benefits in place, through a new, temporary subsidy of the COBRA health benefits continuation program.

The House passed one version of H.R. 1319 by a 219-212 vote Saturday. In that version, the worker health benefits provision would have the federal government pay 85% of workers’ COBRA group health coverage continuation premiums, from the month after the provision became law until Sept. 30, 2021.

The Senate unveiled its eagerly awaited, 628-page version of H.R. 1319 Thursday. Here is a summary of the bill.

The Senate version would use tax credit subsidies to help pay all of the premiums for COBRA continuation benefits from the month after the provision became law through Sept. 30.

The provision is in Title IX, Subtitle F.

Here are some other health and welfare coverage provisions that appear in both the House version and the new Senate version:

Title II, Subtitle I: Exchange Grant Program

This provision would provide $20 million in grant funding that could be used to modernize existing, state-based Affordable Care Act public exchange programs, such as Covered California, Access Health, Connecticut’s Access Health CT or Washington state’s Washington Healthplanfinder exchange.

Title IX, Subtitle A, Part 5: Credits for Paid and Family Sick Leave

This provision would reimburse employers for letting workers take the kinds of paid COVID-19-related leave required by the federal Emergency Paid Sick Leave Act. An employer could deduct cash spent on COVID-19-related sick leave from federal employment tax obligations.

Title IX, Subtitle A, Part 7: Premium Tax Credit

This provision would expand the Affordable Care Act premium tax credit program for 2021 and 2022.

Today, people who earn more than 400% of the federal poverty level cannot use ACA premium tax credits to pay for health coverage, even if premiums for the coverage available would eat up a large share of their income.

Under the H.R. 1319 premium tax credit provision, the government would cap what high-income people have to pay for individual or family health coverage purchased through an ACA public exchange at a maximum of 8.5% of income. High-income exchange plan users could qualify for ACA premium tax credit subsidies if their premium payments exceed that threshold.

Another section would have ACA public exchange programs treat displaced workers who are collecting unemployment benefits in 2021 and who use ACA public exchange plan coverage as if they had income at 133% of the federal poverty level. The provision would help unemployed people qualify for rich health insurance subsidies even if, under the usual ACA exchange program rules, they would be classified as earning too much to get premium tax credit subsidies.