Federal Assistance Expands COBRA Safety Net
Unemployed workers laid off between September 1, 2008, and December 31, 2009, may now be eligible for a federal subsidy that will cover the bulk of their premiums under the Consolidated Omnibus Reconciliation Act (COBRA). Included as part of the stimulus package, the COBRA assistance program also gives unemployed workers a second chance to enroll in COBRA in case they previously declined the coverage due to an inability to pay the premiums.
COBRA is the federal law that extends employer-sponsored insurance for laid-off workers, typically for 18 months. The subsidies will cover 65% of COBRA premium costs for up to nine months.1
Prior to this safety net, the high costs of premiums under COBRA kept many eligible people—fewer than 1 in 10—from enrolling in the program.2
Continuing COBRA coverage can help to protect the unemployed—particularly those experiencing a chronic illness that requires regular medical care—from a risky gap in coverage between jobs.
To qualify for the COBRA subsidy, laid off workers must have annual incomes < $125,000 for individuals and < $250,000 for families. They must also have worked for an employer with > 20 employees. Those who are eligible for Medicare or have coverage through their spouse's insurance do not qualify for the subsidy.
The stimulus package also required employers to contact former employees who were terminated within a certain time period and who had previously declined COBRA coverage, to notify them of the new subsidy option. These individuals will have until June 16, 2009, to decide whether to accept COBRA assistance, if they qualify.3
For more information, including state-by-state details, go to bulletin.aarp.org/yourhealth/policy/articles/cobra_aid_part_of_stimulus_package.html.
Workers can also call the U.S. Department of Labor's Employee Benefits Security Administration at 1-866-444-3272 or visit www.dol.gov/opa/media/press/ebsa/EBSA20090301.htm for more information.
1"COBRA Premium Reduction." Fact Sheet. U.S. Department of Labor. Employee Benefits Security Administration. February 26, 2009.
2"For Many, COBRA Coverage is Out of Reach." The Commonwealth Fund. Commonwealth Fund Digest. February/March 2009.
3"COBRA Premium Reduction." Fact Sheet. U.S. Department of Labor. Employee Benefits Security Administration. February 26, 2009.
Coverage policies may vary by insurer or even between plans offered by the same insurer. This information is presented for informational purposes only and is not intended to provide reimbursement or legal advice. Laws, regulations, and policies concerning reimbursement are complex and are updated frequently. While we have made an effort to be current, the information may not be as current or comprehensive when you view it. Please consult with your counsel or reimbursement specialist for any reimbursement or billing questions.