Jan 22, 2009

ERIC Urges Congress Not to Extend COBRA Health Coverage Beyond Original Legislative Intent

Washington, D.C. -- In a letter sent today to all Members of Congress, The ERISA Industry Committee (ERIC), a Washington, D.C.-based trade association representing America's major employers, urged Congress to avoid expanding COBRA continuing health coverage for purposes that extend beyond its original intent.

The Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1986 permits eligible employees to continue participating in their employer-sponsored health plan for up to 18-36 months after leaving their job. The House Ways and Means Committee earlier today considered legislation to expand and extend COBRA continuing health coverage as part of the economic stimulus package. The legislation, among other things, would eliminate any time limits for COBRA participation by workers with 10 years of employment at a company or those over the age of 55.

"The purpose of COBRA coverage is to prevent coverage gaps so that employees who leave their job can, for a limited time, continue to be insured while they seek alternative, permanent coverage. The purpose of the COBRA program is not, and should not be, to provide long-term, or permanent coverage," wrote ERIC President Mark Ugoretz.

Ugoretz added that "[t]he COBRA system is inefficient, litigious, administratively burdensome, costly, and an actuarial and accounting nightmare. Extending employers' obligation to operate these plans is not stimulative, will result in a cost shift to currently employed beneficiaries, and does nothing to provide viable, long term coverage to uninsured people."

ERIC did offer that limited premium assistance to help displaced workers buy time to find alternative coverage is a reasonable policy proposal worth discussing further. "In these troubling economic times, it is appropriate to offer temporary assistance to displaced workers to pay their COBRA premiums while they seek new employment and alternative coverage. However, Congress should not lengthen the period of time during which employers are obligated to offer COBRA coverage to workers they no longer employ," said Ugoretz.

ERIC's letter is below.

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For more information:
Ted Godbout
Manager, Communications
The ERISA Industry Committee
1400 L Street, NW, Suite 350
Washington, DC 20005
Phone: (202) 789-1400
Fax: (202) 789-1120
tgodbout@eric.org
www.eric.org

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The ERISA Industry Committee (ERIC) is a non-profit association committed to representing the advancement of the employee retirement, health, and compensation plans of America's largest employers. ERIC's members provide benchmark retirement, health care coverage, compensation, and other economic security benefits directly to tens of millions of active and retired workers and their families. ERIC has a strong interest in proposals affecting its members' ability to deliver those benefits, their cost and their effectiveness, as well as the role of those benefits in the American economy.

Text Files:

ERIC Letter to Congress

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