Sen. Sherrod Brown Introduces Legislation to Aid Unemployed Get Health Insurance

January 7, 2009

WASHINGTON, D.C. – United States Senator Sherrod Brown (D-OH) today announced legislation to improve health care access for unemployed Americans. The Coverage Continuity Act of 2009 would address gaps in access to health coverage that jeopardize the health and stability of unemployed workers and their families.

“Layoffs don’t just affect a family’s financial well-being—they can also affect a family’s physical well-being,” said Brown. “Now is not the time for more American workers to join the ranks of the uninsured. We need to make sure that families have access to affordable health care during this challenging time.”

Brown’s legislation modernizes and improves the health coverage tax credit (HCTC), which is currently available to workers who have lost manufacturing jobs due to increased international trade and to retirees whose pension plans have been taken over by the Pension Benefit Guaranty Corporation (PBGC). The refundable credit, which can be redeemed in advance of tax season, currently covers 65% of the cost of health insurance. Due in part to the low subsidy rate, many potential beneficiaries—more than 320,000 in 2005—do not participate in the program. Brown’s legislation increases the subsidy to 85 percent of the health insurance plan cost.

The legislation also temporarily extends the HCTC to individuals with COBRA coverage. COBRA allows unemployed workers and their families to maintain health insurance through their former employer for up to 18 months, as long as they pay the full cost of the premiums and an administrative fee. Due to the high cost of COBRA coverage, only about 20 percent of those eligible for COBRA make use of it during their period of unemployment. The Coverage Continuity Act of 2009 would provide a 12-month extension of COBRA coverage and the HCTC to prevent additional Americans from being uninsured.

The Coverage Continuity Act of 2009 would:

Increase the Health Coverage Tax credit (HCTC) to 85 percent for all current and future recipients beginning in calendar year 2009: The HCTC is an important mechanism for preventing displaced workers from losing health coverage. However, the low take-up rate for the HCTC can be improved by increasing the subsidy level. Brown’s legislation draws from bipartisan legislation introduced in the last Congress by Senator Max Baucus, Chairman of the Senate Finance Committee, and increases the tax credit from covering 65 percent of the cost of insurance to covering 85 percent of that cost.

Expand HCTC eligibility to individuals currently enrolled in COBRA: Effective January 1, 2009, Brown’s legislation would allow individuals currently enrolled in COBRA to claim the HCTC for 18 months or until the end of their COBRA eligibility, whichever comes first.

Extend COBRA coverage period: Brown’s legislation allows individuals whose COBRA eligibility ends between January 1, 2009 and December 31, 2009 to be eligible for an additional 12 months of COBRA coverage as long as they remain continuously enrolled. They would be eligible for the HCTC for the duration of their COBRA coverage.