An Indian Civilizational Perspective

Important Points About COBRA Subsidy Plan under American Recovery and Reinvestment Act of 2009

Wanted to share some important and salient points about COBRA Subsidy plan.

  • Valid for people who were involuntarily terminated between September 1, 2008 and December 31, 2009
  • To be eligible annual income cannot exceed $125,000 for a single person and $250,000 for a couples
  • 65% of existing COBRA premiums will be subsidized by the U.S. Treasury Department
  • Subsidies will be available for up to 9 months
  • If you declined COBRA coverage after September 1, 2008 you will have the option to re-enroll into COBRA with the above subsides
  • Notices of the COBRA subsidies and re-enrollment information will be sent from the COBRA administrator (usually your previous employer)
  • Subsidies will be paid, via a refundable tax credit, directly to the COBRA administrators
  • Subsidies will terminate if the enrollee acquires a new health insurance plan through another employer or is eligible for Medicare
  • Subsidies will only apply to COBRA premiums paid after the effective date of February 17, 2009 and there will be no refund of premiums prior to this date
  • Subsidy Starts: Reduced premiums will generally begin in March, the first full month after the bill was signed.
  • Eligibility: Laid-off employees and their family members who are eligible for and elect COBRA between September 1, 2008, and December 31, 2009, can receive the subsidy. In addition, eligible employees who lost their jobs between September 1 of last year and February 16 of this year who either didn’t sign up for COBRA or who signed up but dropped the coverage have another chance to sign up and get the reduced premium. Watch your mail: Your plan should notify you by April 18 that you have this second opportunity to sign up. Once you receive the notice, you have 60 days to elect the coverage.
  • There are also income limitations. To be eligible, your modified adjusted gross income in the year you receive the subsidy can’t exceed $125,000 ($250,000 for families). If it does, you’ll have to repay all or part of the amount of the premium reduction.
  • How to Sign up: You have to fill out enrollment forms that you receive from your health plan or employer. If you haven’t heard from them yet, call and ask when you can expect to get the documents.
  • How to get cheaper rate if already paying for COBRA: Contact your former employer or insurer and ask them to send the documents so you can sign up for the subsidy. As discussed above, if you’ve already made a March or April payment, your employer or insurer will reimburse you or give you a credit against future premiums. Once the system is up and running, you’ll be responsible for paying 35 percent of the premium, and the government will cover the other 65 percent.
  • How to change the COBRA coverage: If your company offers a cheaper plan, you may be able to switch. It’s up to the company. If it’s allowed, the company has to notify you of that option. Then you have 90 days to elect to change.
  • When you say it is retroactive to September 2008 do you mean I can go back and get the discount from my ex-employer from December 1 which is the first month I paid the full premium? the subsidies will take effect from March 1 – meaning that you will see the lower charges after March 1, 2009; but the effective date of eligibility of people laid off will now start from Sep 2008, although the bill became law in February 2009.
  • Employer was without COBRA, Am I covered? You may be. Many states have continuation coverage, “mini-COBRA” laws, that allow workers at companies with fewer than 20 employees to extend their health insurance with their former employer, similar to the federal COBRA law. The subsidy generally applies to workers at small companies in these states and to public employees. However, states with continuation coverage are not required to offer a second election period to workers who didn’t sign up originally or who signed up and dropped the coverage. They may choose to do so, however. You can call the Department of Labor at (866) 444-3272 for more information.
  • If I can get group coverage from another source, can I still choose subsidized COBRA coverage?No. If you’re eligible for coverage under your spouse’s health plan or Medicare, for example, you can’t get the premium reduction. Likewise, if you get a new job that offers group coverage, you can’t hang on to the subsidized COBRA coverage.
  • How to appeal if I get turned down for COBRA Subsidy: Either the Department of Labor or the Department of Health and Human Services will determine whether you’re eligible. The process for filing an appeal is still being ironed out. Check the DOL website or call (866) 444-3272 for more information.

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25 Comments
  1. Dar says

    I work for the Chicago Suntimes that has just filed Chapter 11. They have cut our severance pay along with our Health Insurance if we are dismissed. Will I still be able to get the Cobra coverage. My company CEO says NO.

  2. Dar says

    I work for the Chicago Suntimes that has just filed Chapter 11. They have cut our severance pay along with our Health Insurance if we are dismissed. Will I still be able to get the Cobra coverage. My company CEO says NO.

  3. Desh says

    Hi Dar – according to the Government site itself you should contact the administrator of each plan or your union representative (if you are represented by a union) to request an explanation of the status of your plan or benefits.

    And then it goes on to say that if the employer “discontinues all its health plans, COBRA continuation coverage will not be available.”

    I would suggest that you talk to the contact in Insurance company to see what is available to you.

  4. Desh says

    Hi Dar – according to the Government site itself you should contact the administrator of each plan or your union representative (if you are represented by a union) to request an explanation of the status of your plan or benefits.

    And then it goes on to say that if the employer “discontinues all its health plans, COBRA continuation coverage will not be available.”

    I would suggest that you talk to the contact in Insurance company to see what is available to you.

  5. Val says

    I work at one of the Sun-Times papers and had the same question. According to the Department of Labor they will have to pay it for 9 months if you were laid off between Sept. 2008 through Dec. 2009; as long as they are in business. If the close up then we are on our own. Visit http://www.dol.gov/ebsa/COBRA…. or call Linda at the Dept. of Labor 312-886-0587. Hopes this helps. Good luck we are gonna need it.

    From the website:
    The American Recovery and Reinvestment Act of 2009 (ARRA) provides for premium reductions and additional election opportunities for health benefits under the Consolidated Omnibus Budget Reconciliation Act of 1985, commonly called COBRA. Eligible individuals pay only 35 percent of their COBRA premiums and the remaining 65 percent is reimbursed to the coverage provider through a tax credit. The premium reduction applies to periods of health coverage beginning on or after February 17, 2009 and lasts for up to nine months for those eligible for COBRA during the period beginning September 1, 2008 and ending December 31, 2009 due to an involuntary termination of employment that occurred during that period. The TAA Health Coverage Improvement Act of 2009, enacted as part of ARRA, also made changes with regard to COBRA continuation coverage.

  6. Val says

    I work at one of the Sun-Times papers and had the same question. According to the Department of Labor they will have to pay it for 9 months if you were laid off between Sept. 2008 through Dec. 2009; as long as they are in business. If the close up then we are on our own. Visit http://www.dol.gov/ebsa/COBRA.html or call Linda at the Dept. of Labor 312-886-0587. Hopes this helps. Good luck we are gonna need it.

    From the website:
    The American Recovery and Reinvestment Act of 2009 (ARRA) provides for premium reductions and additional election opportunities for health benefits under the Consolidated Omnibus Budget Reconciliation Act of 1985, commonly called COBRA. Eligible individuals pay only 35 percent of their COBRA premiums and the remaining 65 percent is reimbursed to the coverage provider through a tax credit. The premium reduction applies to periods of health coverage beginning on or after February 17, 2009 and lasts for up to nine months for those eligible for COBRA during the period beginning September 1, 2008 and ending December 31, 2009 due to an involuntary termination of employment that occurred during that period. The TAA Health Coverage Improvement Act of 2009, enacted as part of ARRA, also made changes with regard to COBRA continuation coverage.

  7. Desh says

    Hey thanks, Val! Thats a very useful piece of info and the handy phone numbers to have!

  8. Desh says

    Hey thanks, Val! Thats a very useful piece of info and the handy phone numbers to have!

  9. Des GS says

    I had COBRA for 18 months, starting Oct-2007, ending March-2009.
    Does Obama’s stimulus can help me?
    Thank you!

  10. Des GS says

    I had COBRA for 18 months, starting Oct-2007, ending March-2009.
    Does Obama’s stimulus can help me?
    Thank you!

  11. Anonymous says

    I did not elect COBRA (because of the cost) when I was laid-off in Nov 2008 and I went with a Blue Cross plan. Now, that I am able to sign up for COBRA, at the reduced rate, I would like to switch to COBRA. I was told by my company that I would have to pay for March and April COBRA coverage, even though I have paid for my Blue Cross coverage for those months. Is this ture?

  12. Anonymous says

    I did not elect COBRA (because of the cost) when I was laid-off in Nov 2008 and I went with a Blue Cross plan. Now, that I am able to sign up for COBRA, at the reduced rate, I would like to switch to COBRA. I was told by my company that I would have to pay for March and April COBRA coverage, even though I have paid for my Blue Cross coverage for those months. Is this ture?

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  14. sağlık yaşam says

    thanks good post. i am forward it… Saglikli Yasam

  15. Anonymous says

    What do I do after Cobra?

  16. Anonymous says

    What do I do after Cobra?

  17. Anonymous says

    I was terminated from my job September 18, I elected to take the Cobra coverage immediately and I do qualify for unemployment. I was told through the Obama Stimulus Act for the unemployed, the unemployed would only pay 35% for 9 months and the employer would pay the difference and get reimbursed. Today I received a ltr that as of 1/1/2010 my premium is going from $120.58 to $$376.91, reason: Premium rated for all employees are being changed. Wouldn’t I be different that an employee? I was terminated so should receive the reduced amount for the full 9 months, I have only had the reduced rate for 3 months. Please help. I have pre-existing conditions now and cannot get insurance coverage at a reduced rate or at all.

  18. Anonymous says

    I was terminated from my job September 18, I elected to take the Cobra coverage immediately and I do qualify for unemployment. I was told through the Obama Stimulus Act for the unemployed, the unemployed would only pay 35% for 9 months and the employer would pay the difference and get reimbursed. Today I received a ltr that as of 1/1/2010 my premium is going from $120.58 to $$376.91, reason: Premium rated for all employees are being changed. Wouldn’t I be different that an employee? I was terminated so should receive the reduced amount for the full 9 months, I have only had the reduced rate for 3 months. Please help. I have pre-existing conditions now and cannot get insurance coverage at a reduced rate or at all.

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  21. Anonymous says

    I have just been laid off and am trying to find insurance. My husband has been on my insurance for the full time of my employment.
    When I try to find an insurance co. I am told they do not take pre
    existing and if they do it would only cover maintenance. I need to know if this is true and also how do we apply for this.

  22. Desh says

    Dear friend:

    If you have been laid off, please ask your HR department for the COBRA forms and discuss the option of using the 65% discount that the Obama’s plan gives. The forms and the process can be coordinated with the HR department and the Insurance company that you used while you were employed. Your insurance will continue the way it was for 18 months and you will get 65% discount for 9 months of that period. Hope that helps.

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  24. Anonymous says

    I have just been laid off and am trying to find insurance. My husband has been on my insurance for the full time of my employment.
    When I try to find an insurance co. I am told they do not take pre
    existing and if they do it would only cover maintenance. I need to know if this is true and also how do we apply for this.

  25. Desh says

    Dear friend:

    If you have been laid off, please ask your HR department for the COBRA forms and discuss the option of using the 65% discount that the Obama’s plan gives. The forms and the process can be coordinated with the HR department and the Insurance company that you used while you were employed. Your insurance will continue the way it was for 18 months and you will get 65% discount for 9 months of that period. Hope that helps.

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