COBRA

As of a month ago, the House of Democrats opted not to extend the subsidy in order to bring down the cost of a job and tax bill that's been winding it's way through Congress. This means that losing your job after June 1, 2010 will result with no 65% coverage for your Cobra Health premium. Continuing the provision of coverage through Dec. 31 would run a cost of $7.8 billion.

With this change in subsidy hundreds of thousands of newly jobless Americans will have to come up with coverage for health insurance on their own. This will be quite difficult considering that an average premium for one month of health insurance amounts to 84% of an individuals unemployment check on average (according to Families USA, a consumer advocacy group).

Reactions from unemployed individuals are arriving everyday. These individuals and families can no longer afford treatment for their illnesses including: diabetes, cancer, high blood pressure and many other crucial sicknesses that require consistent treatment and attention.

"I'm unemployed. I don't have money to pay for medical bills," said Stephanie Kohnke, a St. Paul, Minn. resident who lost her job in May and is waiting to be approved for the subsidy. "This is the worst time to lose that safety net."

Although the decision has been made, House speaker Nancy Pelosi (Democrat-California) states that she plans to revisit the COBRA subsidy. Even with this hope in sight for the unemployed Americans it's a difficult and controversial provision to pass.

Obama signs COBRA Subsidy Extension

President Obama has signed a measure extending federal subsidies of COBRA health care premiums through the end of March.

Under H.R. 4691, the 65%, 15-month premium subsidy is extended to those involuntarily terminated from March 1 through March 31. The measure also will allow employees to recieve the subsidy if they first lost group coverage due to a reduction in hours and then were terminated after enactment of the legislation, if certain conditions are met, according to Business Insurance.

The one-month extension gives the Senate more time to consider it's proposal to provide the subsidy to workers involuntarily terminated through the end of the year.

You will find a link to the updated COBRA notices on the Department of Labor at the bottom of this page. 

COBRA Subsidy Extended - It's official!

President Obama signed into law on Dec. 21 an extension of the COBRA premium subsidy under the American Recovery and Reinvestment Act (ARRA) that was due to expire on Dec. 31.

Important facts about the new law:

. The COBRA subsidy was extended from nine to fifteen months
. The eligibility cutoff for the subsidy has been extended to February 28, 2010 from December 31, 2009
. To be eligible for the subsidy, the involuntary termination of employment must occur by February 28, 2010. The previous requirement that COBRA start on or before the end of the eligibility period has been dropped. For example, the subsidy will be availiable to an individual who is involuntarily terminated in February even if they don't begin COBRA coverage until March 1, 2010.
. New notices explaining the changes must be sent to all affected individuals within 60 days

Next Step:

The Department of Labor is expected to issue guidance on the language to be included in the new COBRA notices.

UPDATE: Bill would extend and expand COBRA subsidy program

The temporary COBRA subsidy program would expand to cover more involuntarily terminated people for longer periods, under a recently introduced House bill. HR 3930 would increase the subsidy period from 9 to 15 months and extend subsidies to people eligible for COBRA due to involuntary job loss between January 1 and June 30, 2010. Under the current subsidy program, perople losing their jobs after 2009 would not be eligible. The bill also would expand the maximum COBRA period from 18 to 24 months for certain individuals losing health coverage due to employment termination or reductions in hours.

Click on the above link for the full text of the House bill.

COBRA: New Federal Laws Affect Group Health Plans

The American Recovery and Reinvestment Act of 2009 has been passed by Congress. It will make several changes affecting employee benefits and signed by President Obama on February 17th. Chief among these is an expansion of the COBRA rules to create a nine-month, 65% subsidy of the COBRA premiums paid by certain terminated employees.

Under COBRA laws most employers are required to provide group health plan continuation coverage upon certain events. The Act affects how that coverage is offered to individuals who lose group health plan coverage due to an involuntary termination of employment or reduction of hours during the period beginning September 1, 2008 and ending December 31, 2009.

The act provides a subsidy for COBRA coverage and imposes a number of requirements on employers, administrator and insurers. The subsidy will cover 65% of the premium, will last for 9 months and will apply to premiums paid for periods of coverage beginning on or after March 1, 2009.

The subsidy will not be available once the individual becomes eligible for coverage under another group health plan or Medicare or otherwise is no longer eligible for COBRA. (The subsidy period does not extend the period of COBRA coverage that would otherwise apply to that individual.) Subsidies may not be applied to payments for health flexible spending accounts.

More information can be found on the US Department of Labor website. 

Download COBRA Notices!
Click the COBRA notices below to download the document.

COBRA Election Notice

COBRA General Notice