If you've been laid off from a job that also provided health insurance, we want to alert you to a recent extension to the COBRA subsidy, first announced by President Obama in February 2009.
Under COBRA (which stands for Consolidated Omnibus Budget Reconciliation Act of 1985), employees of companies that offer health insurance and who were not fired for cause are eligible to continue coverage for themselves and any previously covered dependents. But continuing that coverage can be expensive.
Employers often cover at least a portion of health insurance costs for employees and their dependents, but they are permitted — and most do — to charge 102% of their cost to workers who lose their jobs and choose to continue coverage. A survey last year by Washington, D.C.-based advocacy group FamiliesUSA found that the typical monthly cost for families to continue health coverage under COBRA was $1,069, or 83.6% of unemployment benefits. The COBRA subsidy reduces that cost to 35% of the monthly premium, and that premium has been extended twice since it was first announced.
The latest extension applies to anyone who involuntarily lost a job between April 1 and May 31 of this year. The subsidy lasts for 15 months from when coverage begins. (COBRA coverage typically lasts 18 months; in some cases it can be extended to 36 months.) To qualify for the subsidy, you must apply for coverage within 60 days of losing benefits, not be eligible for Medicare and not be eligible for any other group health plan, such as one offered by a new job or by a spouse's employer.
You can get additional information at http://www.dol.gov/COBRA or by calling a Department of Labor benefits advisor toll-free at (866) 444-3272.
It's possible the subsidy could be extended to people who lose their job after May 31, says Kelly Traw of the Washington, D.C., office of benefits consulting firm Mercer & Co. But she notes: "There was much debate and discussion before the last two extensions, causing a fair amount of anxiety for people who worried they might lose their jobs, and their insurance."
Much more preferable would be to have the next extension apply to anyone who loses a job through the end of 2010, "but, because of concern over cost, I suspect future extensions will also be incremental," Traw says.
So watch this space. We'll keep you updated.
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