Senate Approves Vitale/Buono Bill To Extend COBRA Benefits To More Unemployed

Measure Would Offer Extended Health Benefits to Residents Left Jobless Following Business Closure, Make More New Jerseyans Eligible for Federal Subsidies

TRENTON – The full Senate unanimously approved legislation today sponsored by Senator Joseph Vitale and Senate Majority Leader Barbara Buono, both D-Middlesex, that would offer extended health benefits to residents left jobless as a result of their place of employment closing.

The bill (S-956) would allow certain employees who are laid off due to a workplace closure to continue receiving employer-sponsored health benefits for up to 18 months, under the Consolidated Omnibus Budget Reconciliation Act of 1985, commonly called COBRA. Those individuals – required to purchase the coverage – could then take advantage of reduced insurance premiums, made possible through subsidies provided under the federal economic stimulus.

“We cannot leave behind federal dollars intended to benefit the people who are struggling the most in this economy,” said Senator Vitale. “With this legislation, we will provide more unemployed New Jerseyans with access to health care coverage, and make them eligible for federal subsidies that cover 65 percent of their premium costs. For many families who lost their health insurance with their jobs, this assistance could be enough to restore their coverage.”

Under current state law, COBRA benefits are available only to unemployed residents whose former place of employment continues to offer a group health plan. This effectively blocks unemployed residents whose employer has gone out of business from receiving continuation benefits, also making them ineligible for reduced premiums first provided under the American Recovery and Reinvestment Act of 2009 (ARRA). Federal law allows eligible recipients to pay just 35 percent of their COBRA premiums; the other 65 percent is reimbursed to the provider through a tax credit.

“This legislation will extend a vital safety-net program to residents who are unemployed through no fault of their own. In turn, it will make them eligible for subsidies from the federal government that would cover nearly two-thirds of their health care costs,” said Majority Leader Buono. “We must move swiftly to make this law. We simply cannot afford to turn down an offer by the federal government to pick up the majority of health insurance costs for unemployed residents who desperately need coverage. Too many New Jersey families are depending on it.”

The federal subsidy expires May 31, 2010, but has been extended multiple times and will likely be extended again. This measure would remain effective only as long as the federal premium assistance for continuation coverage is provided. It would apply retroactively, to residents whose employer ceased operations on or after October 1, 2009.