Mark P. Scherzer Health Insurance Law Blog on Lawyers.com

    As Congress debates major health insurance overhauls, we are seeing a number of improvements in consumers’ COBRA rights – that is, their rights to continue medical plan coverage when they lose their jobs, suffer disability, or their hours are reduced.

    New York has very similar continuation rules to COBRA which apply to all health insurance policies issued in this state.The NY rules apply to smaller plans, with as few as two employees.

    The recent developments address frustrations that have long been of concern to people with serious or chronic illness, like HIV/AIDS, multiple sclerosis, or cancer: that the COBRA coverage period may be too short, that federal COBRA appears to exclude domestic partners from eligibility, and that COBRA is often unaffordable.

    Length of Health Insurance Coverage: This July, New York adopted a law to extend the basic health insurance continuation period from 18 to 36 months. The law applies to health insurance policies which are issued or renewed after July 1, 2009. For people covered by larger employers governed by federal COBRA, if their medical plan is insured and therefore also subject to New York insurance regulation the additional 18 months of continuation will start after they complete their 18 months of federal COBRA. Further legislation is now under discussion to make the extended COBRA rules retroactively available to anyone who was covered on July 1, 2009, regardless of when their policy renews.

     The COBRA period may be further extended if Congress adopts a provision found in the health reform bill that has already passed the House of Representatives. That provision would give anyone on COBRA after January 1, 2010, the right to continue COBRA coverage until 2014, when exchanges are operating in all states that can sell subsidized coverage to individuals.

    Domestic Partner coverage: It has long been assumed, because of the wording of the COBRA statute, that COBRA rights were only required to be offered to employees, their opposite sex spouses (because the federal Defense of Marriage Act, DOMA, does not recognize same sex marriages), and their children. In August of this year, however, a major west coast law firm reported that the San Francisco regional office of the U.S. Department of Labor had interpreted federal COBRA rights as applying to unmarried domestic partners in one specific circumstance. When an employee loses his or her coverage, and that employee has a domestic partner who is eligible for dependent coverage under the terms of the plan, then both the employee and the domestic partner can elect COBRA because the law requires that the employee have the same coverage rights as other members of the group. If employees have the right to cover domestic partners, then COBRA participants do too.

    Unfortunately, COBRA rights under this theory would not extend to domestic partners who are separating from a covered employee or whose covered employee partners die. But the interpretation does bring us a step closer to equal treatment for couples who marry and those, like lesbian and gay male couples, who might want to but are legally barred from doing so.

    Affordability of Coverage: One reason COBRA coverage is such an important right to people is that group health insurance coverage is almost always cheaper than buying the same medical insurance benefit package as an individual. Still, because COBRA requires the insured person to bear the entire premium without the employer being required to contribute any amount, COBRA premiums for most people represent a big jump from what they had to pay as group members. As a result, fewer than 20% of those eligible for COBRA have ever elected to buy the coverage.

    Last year, as part of the economic stimulus package known as ARRA, the American Recovery and Reinvestment Act, the government recognized that the burden of job loss and increased premiums was a hard combination for most people of moderate means to bear. Those who lost coverage because of a job loss between September 1, 2008, and December 31, 2009, were offered a 65% COBRA premium subsidy for up to 9 months to enable them to keep their coverage.The impending end of that program has brought great stress to many while jobs are still being lost and replacement jobs are hard to find.

    We thank Peter Newell of the United Hospital Fund for bringing to our attention that Congress is in the process of enacting into the Department of Defense Appropriations Act for 2010 a provision which would extend the ARRA subsidies to people who lose health insurance coverage up until February 28, 2010, and is adding an additional 6 months to the initial subsidy period for both the newly eligible and those who have already received subsidies. The fifteen months of subsidy is almost as long as the current standard COBRA period, and will help many who continue to need all the help they can get to stay afloat in this recession.