About 2 weeks ago President Barack Obama signed a measure to extend the Cobra health care benefit subsidy for workers who have been terminated from their jobs. Under the new measure workers terminated from January 1st through Feb. 28th, 2010 would eligible to receive the subsidy to help pay for their health care benefits for up to 15 months, 6 months longer than was passed in the stimulus bill last February. Previously eligibility for the subsidy would have only run through 12/31/2009.
From the Wall Street Journal:
President Barack Obama on Monday signed a measure to extend a federal subsidy for continued health-insurance coverage for involuntarily terminated workers under employer group plans.
The law extends the subsidy an additional six months for a total of 15 months, up from the current nine. The subsidy applies only to workers let go by employers.
Under Cobra, the Consolidated Omnibus Budget Reconciliation Act, severed workers can stay on their employer's group health plan for up to 18 months, or longer in some circumstances, provided they pay the full premium plus an administrative fee. With the subsidy, terminated workers pay 35% of the premium.
Since laid-off workers pay for Cobra benefits from their own pockets, the federal subsidy, part of the federal stimulus package enacted last February, is meant to lighten their economic load.
Eligibility for the subsidy had been due to expire on Dec. 31 but has been extended to workers laid off between Jan. 1 and Feb. 28, 2010, in addition to those let go between Sept. 1, 2008, and Dec. 31, 2009, under the original program.
Details Of Cobra And How To Sign Up For It
So if you have been laid off from your job, you are probably eligible for continued health care coverage through your former employer. Important points to remember:
- If you are laid off and your former employer has 20 or more employees, the company is required to offer you the option to pay for an extension of your health insurance coverage for at least 18 months, at the lower group rate.
- Your employer must inform you in writing about your rights under COBRA. You then have a 60 day period from the date of the notice or the date your health insurance ended to enroll, or sign up for coverage under COBRA.
- COBRA coverage means that your health care premiums will be paid at a lower group rate, which are usually lower than insurance obtained on your own.
For an FAQ about COBRA coverage in general, please see the government's COBRA FAQ.
If you sign up for Cobra benefits when you are terminated, you may be eligible for a premium reduction and subsidy through the government assistance program. You may be eligible if:
- You became eligible for COBRA continuation coverage at any time during the period from September 1, 2008 through February 28th, 1010.
- You elected to obtain COBRA coverage when it was first offered.
- If you obtained COBRA due to an involuntary termination of employment that occurred at some time from September 1, 2008 through February 28th, 1010.
- The subsidy will help pay for the coverage for up to 15 months.
- With the subsidy workers would have to pay 35% of the premium. (The government pays up to 65%)
For more details about getting a premium reduction when signed up for the COBRA program, please see the government's FAQ
Are There Income Limits To Premium Reduction For COBRA Coverage?
If you're considering signing up for COBRA premium reduction, there are some exclusions. The subsidy phases out for individuals whose modified adjusted gross income exceeds $125,000, or $250,000 for those filing joint returns (income tax liability will be increased to help repay part of the subsidy).
Taxpayers with modified adjusted gross income exceeding $145,000, or $290,000 for those filing joint returns, do not qualify for the subsidy at all. Details.
Have you signed up for COBRA coverage after losing a job? Is this subsidy helping you to pay for your coverage? Tell us your thoughts about the subsidy, and COBRA coverage in the comments.