Bill to Extend COBRA Benefits to Employees of Companies That Cease to Exist

On May 20, the Senate passed a bill (S956) that would provide for the continuation of health insurance coverage for employees and their dependents covered under group health benefits plans when an employer ceases to exist. The provisions of this bill will enable such employees to benefit from federal COBRA subsidies that cover 65 percent of the cost of the continuation health benefits coverage, which were enacted as part of the American Recovery and Reinvestment Act of 2009 (ARRA). Under the bill, whenever an employer ceases to exist, the insurer for that employer’s health benefits plan must make available the same benefits under that plan to a covered employee and any spouse or dependent child who is a qualified beneficiary on the day prior to the employer ceasing to exist. If elected, the period of continued coverage provided under the bill will be extended for 18 months. The bill would remain in effect for the duration of the federal COBRA subsidies provided under ARRA.