COBRA stimulus plan

The 2009 COBRA Subsidy

In this blog I will summarize information on the COBRA Stimulus plan changes that could greatly impact you if you are unemployed in the years of 2008-2010.

Before we learn more about the COBRA stimulus plan, let's start with explaining a bit about COBRA (The Consolidated Omnibus Budget Reconciliation Act). The Act was put into law in 1985 by Clinton to help workers who lost their job continue their health insurance. Basically, it gave the ex-employee the ability to continue their employer sponsored health insurance plan at a premium cost of 150-200% more than costs for active workers (thus deeming it unaffordable to most unemployed beneficiaries).

COBRA Stimulus Plan:
Part 1: Reduced Premiums The COBRA stimulus plan basically has two parts.
People who are currently enrolled in the COBRA plan will get a 65% reduction in their premium costs.

Part 2: The Ability to Re-Enroll into COBRA Recently unemployed people now have the ability to re-enroll into the COBRA plan, even if they had denied coverage in the past. This will help a great amount of people who choose not to continue their health insurance through COBRA because they just could not afford it. Note that coverage cannot date back before 4/1/09.
Key Details about the COBRA Stimulus Plan 1. Qualified Beneficiaries (not gross misconduct), who were involuntarily terminated between September 1, 2008 and December 31, 2009 2. Annual income cannot exceed $125,000 for a single person and $250,000 for a couple3. 65% of existing COBRA premiums will be subsidized by the U.S. Treasury Department. The employer pays and then the government will reimburse those costs.4. Subsidies will be available for up to 9 months 5. If you declined COBRA coverage after September 1, 2008 you will have the option to re-enroll into COBRA with the above subsides 6. Second chance notices of the COBRA subsidies and re-enrollment information will be sent from the COBRA administrator (usually your previous employer) 7. Subsidies will be paid, via a refundable tax credit, directly to the COBRA administrators 8. Subsidies will terminate if the enrollee acquires a new health insurance plan through another employer or is eligible for Medicare 9. 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
10. You have 60 days from termination to elect COBRA coverage, then 45 days to pay that premium.

Final note: This is a great plan and I strongly suggest that if you are a Qualified Beneficiary that you take advantage of this offer. Your unanticipated medical bill could drain your savings much quicker than the cost of this plan. Employers, this news came to us fast- make sure you read the rules as strict penalties of 110% apply. Feel free to contact me for additional resources, comments or questions at Rebecca@agency8recruiting.com. Have a blessed day!