WASHINGTON – A proposed increase in subsidies for unemployed Americans in the COBRA program could create havoc for employers and those charged with administering the program.

Legislation to extend and enhance the COBRA subsidy was introduced two weeks ago in the House and last week in the Senate. The proposed legislation – S.2730 in the Senate and HR. 3930 in the House – would continue COBRA healthcare coverage for another six months for those who have been laid off and their families.

“Though this is a great help for Americans on tight budgets, this proposal will leave employers scrambling,” said officials.

But there's a twist – a proposed subsidy increase, from 65 percent to 75 percent. It's unclear whether the increase wouldl apply to all COBRA participants, the newly unemployed or both. It's also unclear if those who have received 65 percent will be entitled to any adjustment for their time already on COBRA to gain parity with those who would receive 75 percent.

"Since the subsidy was introduced, studies have shown that the number of COBRA participants has doubled and the amount of work related to COBRA administration is three to five times what it was due to the confusion, tax implications and new reporting requirements under ARRA (the American Recovery and Reinvestment Act)," said Cathryn Scivicque, vice president of employer services for COBRAGuard, a Mission, Kan.-based certified COBRA administrator.

“Employers and COBRA participants will have to prepare for changes and be patient as lawmakers make up their minds," said Robert Meyers, COBRAGuard's president. "Since ARRA passed earlier this year, COBRA administration has been a messy proposition. Now, it will be even messier."