In 2009, the American Recovery and Reinvestment Act (ARRA, also called the Stimulus Act) provided a 65% reduction in monthly COBRA premiums for individuals who met the qualifications.
Below you'll find some helpful facts on this Health Insurance coverage option.
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Question:
I was recently laid off of my job. I was told that I may be able to get a reduction in my COBRA premiums? Is this true?
Answer:
The answer to this question depends on when you were laid off and under what circumstances. The American Recovery and Reinvestment Act of 2009 (ARRA) provides for a 65% reduction of COBRA premiums in some cases. You can pay only 35% of the full COBRA premium for up to 15 months if you are eligible for the premium assistance. To qualify, you must have involuntarily lost your job between September 1, 2008 and February 28, 2010. If your job ended on or after March 1, 2010 you will not be eligible for the premium assistance. You will also not be eligible for premium assistance if you quit your job – but you can still use COBRA to continue your employer-sponsored group health coverage.
Here are two examples. In the first case, my job ended on February 7, 2010. I did not quit but was laid off. My health coverage from my job will end at the end of February. Under COBRA, I can choose to continue the group health coverage for myself and for any dependents after February. I will have to pay a monthly premium to keep this coverage. Because my job ended before March 1, 2010 I am eligible to pay a reduced monthly premium (only 35% of the full premium) for up to 15 months. After 15 months, if I still need the coverage, I will have to pay the full premium amount each month.
In a second example, I am laid off on March 4, 2010. I am not eligible for premium assistance under ARRA because my job ended after February 28, 2010. I can still use COBRA however to continue the health coverage for myself and any dependents. I can continue my health coverage for up to 18 months (or 29 months if I have been determined disabled by Social Security).
What Is COBRA Continuation Coverage?
COBRA law was enacted in 1985 under the Consolidated Omnibus Budget Reconciliation Act (COBRA). COBRA allows an employee to choose to continue employer-sponsored group health coverage after the employee stops working. The employee can choose to pay a monthly premium and continue the health coverage for themselves and any dependents who were covered by the plan. To qualify for continuation coverage under COBRA, an employee must have lost group health coverage because of: 1) voluntary or involuntary termination of employment, for reasons other than gross misconduct, or 2) a reduction in the hours they work. There are other events (such as the death of a covered employee, divorce, or a child's loss of dependent status) that can provide someone with an opportunity to continue health coverage under COBRA. The employee can continue health coverage for up to 18 months, or up to 29 months if they are found disabled according to Social Security rules.
When a beneficiary is considering using to use COBRA, it is important that they consider all other possible health coverage options, such as Medicaid. COBRA premiums can be very expensive for many of the beneficiaries we work with. The ARRA premium assistance program has made COBRA premiums more affordable, but this program will not be available to workers whose jobs end after February 28, 2010. Often individuals will use up all of their savings paying COBRA premiums, when there are other less expensive alternatives that can provide them with health coverage.
Employers with 20 or more employees are subject to federal COBRA rules. In your state, additional employers may be required to offer continuation coverage. 40 states have laws that expand the federal COBRA laws. You can find information on your state COBRA laws at:
http://www.statehealthfacts.org/comparetable.jsp?cat=7&ind=357&typ=5&gsa=1
Full information on COBRA, including how to enroll in COBRA continuation coverage, can be found at the U.S. Department of Labor website:
http://www.dol.gov/ebsa/cobra.html
This website provides a Fact Sheet on COBRA Premium Reduction under the ARRA:
http://www.dol.gov/ebsa/newsroom/fsCOBRApremiumreduction.html
There is also “An Employee's Guide to Health Benefits Under COBRA” will at:
http://www.dol.gov/ebsa/publications/cobraemployee.html
I was recently laid off of my job. I was told that I may be able to get a reduction in my COBRA premiums? Is this true?
Answer:
The answer to this question depends on when you were laid off and under what circumstances. The American Recovery and Reinvestment Act of 2009 (ARRA) provides for a 65% reduction of COBRA premiums in some cases. You can pay only 35% of the full COBRA premium for up to 15 months if you are eligible for the premium assistance. To qualify, you must have involuntarily lost your job between September 1, 2008 and February 28, 2010. If your job ended on or after March 1, 2010 you will not be eligible for the premium assistance. You will also not be eligible for premium assistance if you quit your job – but you can still use COBRA to continue your employer-sponsored group health coverage.
Here are two examples. In the first case, my job ended on February 7, 2010. I did not quit but was laid off. My health coverage from my job will end at the end of February. Under COBRA, I can choose to continue the group health coverage for myself and for any dependents after February. I will have to pay a monthly premium to keep this coverage. Because my job ended before March 1, 2010 I am eligible to pay a reduced monthly premium (only 35% of the full premium) for up to 15 months. After 15 months, if I still need the coverage, I will have to pay the full premium amount each month.
In a second example, I am laid off on March 4, 2010. I am not eligible for premium assistance under ARRA because my job ended after February 28, 2010. I can still use COBRA however to continue the health coverage for myself and any dependents. I can continue my health coverage for up to 18 months (or 29 months if I have been determined disabled by Social Security).
What Is COBRA Continuation Coverage?
COBRA law was enacted in 1985 under the Consolidated Omnibus Budget Reconciliation Act (COBRA). COBRA allows an employee to choose to continue employer-sponsored group health coverage after the employee stops working. The employee can choose to pay a monthly premium and continue the health coverage for themselves and any dependents who were covered by the plan. To qualify for continuation coverage under COBRA, an employee must have lost group health coverage because of: 1) voluntary or involuntary termination of employment, for reasons other than gross misconduct, or 2) a reduction in the hours they work. There are other events (such as the death of a covered employee, divorce, or a child's loss of dependent status) that can provide someone with an opportunity to continue health coverage under COBRA. The employee can continue health coverage for up to 18 months, or up to 29 months if they are found disabled according to Social Security rules.
When a beneficiary is considering using to use COBRA, it is important that they consider all other possible health coverage options, such as Medicaid. COBRA premiums can be very expensive for many of the beneficiaries we work with. The ARRA premium assistance program has made COBRA premiums more affordable, but this program will not be available to workers whose jobs end after February 28, 2010. Often individuals will use up all of their savings paying COBRA premiums, when there are other less expensive alternatives that can provide them with health coverage.
Employers with 20 or more employees are subject to federal COBRA rules. In your state, additional employers may be required to offer continuation coverage. 40 states have laws that expand the federal COBRA laws. You can find information on your state COBRA laws at:
http://www.statehealthfacts.org/comparetable.jsp?cat=7&ind=357&typ=5&gsa=1
Full information on COBRA, including how to enroll in COBRA continuation coverage, can be found at the U.S. Department of Labor website:
http://www.dol.gov/ebsa/cobra.html
This website provides a Fact Sheet on COBRA Premium Reduction under the ARRA:
http://www.dol.gov/ebsa/newsroom/fsCOBRApremiumreduction.html
There is also “An Employee's Guide to Health Benefits Under COBRA” will at:
http://www.dol.gov/ebsa/publications/cobraemployee.html
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