4 Stimulus Add-Ons on the Table

Get ready for Stimulus Part 2.

Against a backdrop of deteriorating jobs, administration officials and policy makers are weighing further action intended to prop up the labor market and expand some federal safety nets.

Despite some signs that the economy is beginning to recover, most economists agree that the labor market will worsen before it improves. In September, the unemployment rate rose to 9.8%, according to a Labor Department report -- one that President Obama called “a sobering reminder that progress comes in fits and starts.” Moody’s Economy.com, which provides economic analysis, expects more near-term fits forecasting the unemployment rate will reach 10.1% by mid-2010.

The jobs outlook is part of a broader economic picture giving policy makers more ammunition to act again. And although the administration has balked at calling any new measures part of a new stimulus package, these moves will require fresh legislation and more money.

“Whatever combination of things they’re doing won’t be near the $787 billion price tag of the February stimulus,” says Nigel Gault, chief U.S. economist at IHS Global Insight. “But there will be a number of piecemeal measures.” (A White House spokesman says the president and his economic team are only in “preliminary discussions” regarding proposals to boost the economy and create jobs.)

Here’s what’s on the table.

Current program: Workers get 79 weeks of unemployment benefits; expires Dec. 31, 2009.

The House approved legislation in September to provide 13 additional weeks of unemployment benefits to states with jobless rates of 8.5% or higher (currently 28 states). Meanwhile, Democrats in the Senate are pushing a similar measure that would give workers in all states these additional weeks of benefits.

With long-term unemployment on the rise, it’s very likely that unemployment insurance benefits will be extended again, says Jim Horney, director of federal fiscal policy at the Center on Budget and Policy Priorities (CBPP), a left-leaning research group. “You have people in a number of hard-hit states who are going to run out of benefits. When they hit that limit, that’ll be it despite the fact that their state has very high unemployment and the chance of finding a job is slim,” he says.

Current program: A 65% subsidy of Cobra health insurance premiums for workers laid off between Sept. 1, 2008 and Dec. 31, 2009; the subsidy lasts for up to nine months.

The stimulus that went into effect earlier this year included a provision in which the government pays 65% of the Cobra premium for up to nine months for workers who are involuntarily let go. In the past, laid-off workers who wanted to continue their employer-sponsored coverage had to pay the entire premium plus a 2% administrative fee. Given the uptick in Cobra usage since the subsidy began in February – enrollments have doubled as of August, according to a study by human resources firm Hewitt Associates – an extension will likely pass.

Under the subsidy, the cost of maintaining the average policy would be $377 per month for a family and $140 for an individual, according to a report by the Kaiser Family Foundation, a health policy nonprofit. Once the subsidy expires, that cost would rise to $1,078 per month for family coverage and $400 a month for individuals.