COBRA Subsidy
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On April 15, President Obama passed an extension of the COBRA subsidy that allowed workers laid off from their jobs from April 1, 2010 through May 31, 2010 to qualify. Congress has not yet passed another extension. Advocates hope that the COBRA subsidy will be extended for workers laid off through the end of the year.
Massachusetts unemployed workers who are not eligible for the COBRA subsidy may still be eligible for premium assistance from the Medical Security Program. |
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 and the 2010 Department of Defense Appropriations Act. It is a temporary program. The subsidy is available to workers terminated from their jobs from September 1, 2008 through May 31, 2010.
Am I eligible?
You are eligible for the COBRA subsidy if:
- you were laid off from your job from September 1, 2008 through May 31, 2010
- 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 elect COBRA coverage within the time limits
- 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 15 months.
- The subsidy applies to individual or family coverage.
- If your employer offers more than one health plan, you may be allowed to 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.
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.
If you are denied the COBRA subsidy, you can request an expedited review of the denial by the Department of Labor (DOL). The DOL must complete the review within 15 business days of the date you submit your request for review. The application is available online at Application for Review of Denial of COBRA Premium Reduction.
Useful links
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COBRA Premium Assistance
Description, eligibility rules, benefits, how the COBRA subsidy works with the Medical Security Program, and other information about the COBRA subsidy, from the Massachusetts Law Reform Institute.
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Information for employees and employers about the federal ARRA COBRA subsidy, from the U.S. Department of Labor:
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H.R. 4691: Temporary Extension Act of 2010 and H.R. 4851: Continuing Extension Act of 2010
Information about the House bills that extend the COBRA subsidy and certain other programs. From Govtrack.us.
COBRA subsidy section last updated on 6/14/10
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