What happens if you lose your job which also provided your health insurance benefits? This is not an uncommon problem as health insurance in this country is largely tied to employment. So, what can you do? Luckily, there is some assistance available. It’s called COBRA.
Brief Introduction to COBRA
The Consolidated Omnibus Budget Reconciliation Act (COBRA) gives workers and their families who lose their health benefits the right to choose to continue group health benefits provided by their group health plan for limited periods of time under certain circumstances such as voluntary or involuntary job loss, reduction in the hours worked, transition between jobs, death, divorce, and other life events. Under the old guidelines, qualified individuals may be required to pay the entire premium for coverage up to 102 percent of the cost to the plan.
COBRA Premium Reduction of 2009
The latest stimulus package, also referred to as the American Recovery and Reinvestment Act of 2009, has included a provision that will reduce the COBRA health coverage premiums by 65% for those who qualify. This can be a tremendous benefit for those who may otherwise find it difficult to pay the entire premium while being without work.
Qualifying for the COBRA Premium Reduction
The American Recovery and Reinvestment Act of 2009 provides for a 65% reduction in COBRA premiums for certain assistance eligible individuals for up to 9 months. The premium reduction applies to periods of coverage beginning on or after Feb. 17, when the law was enacted. An assistance eligible individual is a COBRA qualified beneficiary who meets all of the following requirements:
- Is eligible for COBRA continuation coverage at any time during the period beginning September 1, 2008 and ending December 31, 2009;
- Elects COBRA coverage (when first offered or during the additional election period), and
- Has a qualifying event for COBRA coverage that is the employee’s involuntary termination during the period beginning September 1, 2008 and ending December 31, 2009.
The subsidy phases out for individuals whose modified adjusted gross income exceeds $125,000, or $250,000 for those filing joint returns. Taxpayers with modified adjusted gross income exceeding $145,000, or $290,000 for those filing joint returns, do not qualify for the subsidy.
For more information, please visit the Department of Labor’s COBRA page.
