On May 20, 2010, Representative Sander Levin and Senator Max Baucus introduced the American Jobs and Closing Tax Loopholes Act. If passed, this new law does several things, including:
- Continue and extend the COBRA subsidy through 2010. Eligible workers get a 65% subsidy for up to 15 months. Also, workers who lost their jobs on or before December 31, 2010 are eligible for the subsidy
- Extends the May 31, 2010 expiration date for the Emergency Unemployment Compensation to December 31, 2010. The program gives workers up to 53 weeks of unemployment benefits
Federal lawmakers are expected to vote on the new law before the extended COBRA and unemployment benefits expire at the end May 2010.
On April 5, 2010, thousands of Americans began losing their COBRA benefits. There were two main reasons: Either they had been out of work for more than the 26-month unemployment insurance/COBRA period, or because the "COBRA subsidy" passed as part of the American Reinvestment and Recovery Act (ARRA) expired.
On April 26, President Obama signed a new law extending the COBRA subsidy through May 31, 2010. As before, eligible workers pay 35% of their COBRA premiums and the coverage provider gets a federal tax credit for the remaining 65%.
As May 31 looms, there's hope for the thousands of Americans and their families who still need help paying for COBRA benefits. Federal lawmakers are working on the American Workers, State, and Business Relief Act of 2010. If passed, the law extends the COBRA subsidy though the end of 2010. It's a law President Obama agrees needs to be passed.
The COBRA assistance program is set to expire Dec. 31, 2009, and there is currently no relief for those who will lose their jobs in 2010. However, assistance with payment of COBRA premiums may be continued if proposed legislation is passed that would extend coverage. Bills are pending in both the House and Senate to extend the number of months of COBRA premium assistance for those currently eligible and to make the subsidy available to people laid off through June 30, 2010.
Assistance with COBRA Payments
The economic stimulus bill, also known as the American Reinvestment and Recovery Act (ARRA), that was passed last February, included some relief on COBRA premiums. Employees who lost their jobs were given 65% of their COBRA premium for up to nine months. The COBRA subsidy is currently available to people who were laid off up until Dec. 31, 2009.
To be eligible for COBRA assistance, you must have been involuntarily terminated from your job between Sept. 1, 2008, and Dec. 31, 2009. Also, your income in the year you receive the subsidy cannot be more than $125,000 for individuals or $250,000 for married couples filing their taxes jointly. Eligible individuals pay only 35% of their COBRA premiums and the remaining 65% is reimbursed to the coverage provider through a tax credit.
Assistance Running Out
People who began getting federal COBRA subsidies last March received the last of those subsidies in November. If people started getting subsidies later in the year, their subsidies will expire after nine months.