COBRA Subsidy
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What is COBRA?
COBRA is a federal law that allows workers who lose their jobs to continue their group health insurance for a limited period of time, usually 18 months. Employers with 20 or more employees must offer COBRA for their group health plans. The Massachusetts Mini-COBRA law requires employers with 2-19 employees to offer similar benefits for their group health plans.
COBRA coverage can be very expensive. Unemployed workers often have to pay the full monthly premium cost plus an administrative fee. For people surviving on unemployment benefits, COBRA may be unaffordable. However, COBRA group coverage is usually less expensive than individual health plans.
For more information about COBRA, see FAQs About COBRA Continuation Health Coverage on the U.S. Department of Labor web site.
What is the federal COBRA subsidy?
The federal COBRA subsidy is a program that lowers the cost of employer group health insurance coverage for people who have lost their jobs. The subsidy covers 65% of COBRA monthly health insurance premiums for unemployed workers and their families. The subsidy went into effect February 17, 2009.
The COBRA subsidy is part of the 2009 American Recovery and Reinvestment Act. It is a temporary program. The subsidy is available to workers terminated from their jobs from September 1, 2008 through December 31, 2009.
Am I eligible?
You are eligible for the COBRA subsidy if:
- you were laid off from your job from September 1, 2008 through December 31, 2009
- you were laid off involuntarily, and not because of gross misconduct
- you had health coverage through your employer's group health insurance plan when you lost your job
- your employer continues to offer group health insurance coverage
- you are in one of these situations:
- you have COBRA coverage now
- you had COBRA coverage but terminated it
- you were eligible for COBRA coverage but did not choose it
- you are not eligible for another employer group health plan or for Medicare
- your income for the year will be no more than $125,000 (individual) or $250,000 (family). You can get a partial subsidy if your income is no more than $145,000 (individual) or $290,000 (family).
The subsidy applies to all federal COBRA plans for employers with 20 or more employees, and to all state-required COBRA plans for smaller employers.
What benefits will I get?
The COBRA subsidy offers these benefits:
- You can continue your group health insurance coverage at a lower cost. You pay only 35% of your monthly premium. The federal subsidy covers the remaining 65% of your premium.
Note: If you do not pay the entire cost of your COBRA monthly premium, the subsidy applies to your portion of the premium.
- You can get the subsidy for up to 9 months.
- The subsidy applies to individual or family coverage.
- If your employer offers more than one health plan, you can switch to another plan without having to wait for an enrollment period (with some exceptions). The monthly premium for the new plan cannot be higher than your current premium.
- If you lost your job September 1, 2008 or later, and you did not take COBRA when you lost your job, you can sign up now. (Unemployed workers with with mini-COBRA plans should check with their employers.)
How do I apply?
Your former employer should give you a notice about the subsidy. The notice should include the enrollment forms you need, and the name, address, and phone number of the plan administrator.
If you do not have COBRA coverage now, you have 60 days from the notice date to sign up. If you are allowed to switch plans, you have 90 days from the notice date to enroll in another health plan.
If you do not get a notice, contact your former employer. If you need help, you should call the U.S. Department of Labor, Employee Benefits Security Administration, at 1-866-444-3272.
Useful links
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COBRA Premium Assistance
Description, eligibility rules, benefits, how the COBRA subsidy works with the Medical Security Plan, and other information about the COBRA subsidy, from the Massachusetts Law Reform Institute.
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COBRA Continuation Coverage Assistance Under The American Recovery And Reinvestment Act (ARRA) Of 2009
Information for employees and employers about the federal ARRA COBRA subsidy, from the U.S. Department of Labor.
COBRA subsidy section last updated on 7/20/09
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