utilizes career resources for job seekers
at the central branch of the Free Library
of Philadelphia. Photo: AP/Matt Rourke
If you lose your job, you don’t have to lose your health insurance.
Under COBRA (Consolidated Omnibus Budget Reconciliation Act), former employees can continue to receive health coverage from their former employer when they pay the full premium, including the share that the employer used to pay plus a 2%administrative fee. Sounds expensive for someone who doesn’t have a job, right? Well it is, but the stimulus package that we keep hearing so much about can help a lot.
The February 2009 stimulus bill (American Recovery and Reinvestment Act of 2009) provided funding to help laid-off workers pay these premiums. The law provided a 65% subsidy for COBRA premiums for up to 9 months, which is half of the typical COBRA eligibility period of 18 months. Laid-off workers first became eligible for the subsidy in March 2009.
Here’s how it works: eligible employees pay 35% of the COBRA premium to their former employer and the employers pick up the remaining 65%, which is then reimbursed by the government through a payroll tax credit. Under the original 9 month subsidy, the first eligible group ended at the end of November 2009. But there is good news.
Benefit subsidy extended to 15 months
On December 21, 2009 The Department of Defense Appropriations Act of 2010, was signed into law and includes a two-point extension of the original COBRA subsidy:
• The duration of the subsidy has been extended from nine (9) months to fifteen (15) months.
• The eligibility period has been extended to include those who become eligible for COBRA due to a lay off on or before February 28, 2010.
• To calculate the time you have remaining on the COBRA subsidy, use eHealthInsurance’s COBRA Subsidy Calendar Widget in eHealthInsurance’s media center or at Widgetbox.
After the subsidy was first passed in February 2009, COBRA enrollment doubled, according to an analysis by Hewitt Associates. With the subsidy, the cost of maintaining the average policy is $398 per month for a family and $144 for an individual, according to the Kaiser Family Foundation. Without the subsidy, that cost jumps to $1,137 per month for family coverage and $410 per month for individual coverage.
Unfortunately, if your company closed or went bankrupt and there no longer is a group health plan, the COBRA subsidy is not available.