Lost your job? COBRA subsidies may help you keep your medical benefits

In case you are unfamiliar with the term, COBRA (Consolidated Omnibus Budget Reconciliation Act) is a program with which people can continue their health insurance coverage after leaving a job by paying the premiums. Often this is of great benefit because the cost of the premium through the former employer is less than that of buying new coverage as an individual.

Due to the state of the economy and rise of unemployment, the Feds enacted ARRA¹ which provides for premium reductions and other options for people who were involuntarily terminated "during the period beginning September 1, 2008 and ending December 31, 2009".²

In a nutshell, if eligible, an individual would be responsible to pay 35% of the COBRA (health insurance) premium; the former employer pays the remaining 65% and is reimbursed through a tax credit.²

Normally small companies (those with 20 employees or less) are exempt from having to provide COBRA to former employees. However, some states have enacted what is being called "Mini COBRA", which means that small companies have to offer ARRA. In some states, employees who were laid off from companies that have since closed may be eligible for benefits as well. Rhode Island recently enacted both the "Mini COBRA" and allows benefits for former employees of now closed businesses. ³

Two particularly helpful items about this new legislation is that (as far as I can tell) your (former) employer is REQUIRED to tell you about it.⁴ And, even if you were terminated before the laws were enacted and declined COBRA, you may still be able to continue your benefits under these acts. ARRA was first initiated February 17, 2009, but coverage is retroactive to September 1, 2008. ²

Of course, not everyone will be eligible, so it depends on your specific situation and possibly your state laws. The basic guideline for getting the subsidy is that you must have been involuntarily terminated within the specified dates but it cannot have been for gross misconduct.

I wrote this piece is an effort to spread this information, but I am in no way an expert on COBRA, employment law, or ARRA. If you need further assistance, you can contact me and I can try to do a web search to point you in the right direction, but I cannot offer any advise.

¹ The American Recovery and Reinvestment Act of 2009
² Source: US Dept of Labor COBRA page
³ Source: Small Business COBRA & Closed Business COBRA
⁴ Source: State of RI Lt Gov website
"Information for Employers
Are you an employer that laid-off or released any employees after September 1, 2008? If so, then you may have requirement to follow based on this new law. The federal department of labor has detailed information on its website. All employers will need to change they way they inform any workers who are involuntarily terminated about their COBRA benefits."


Other Sources
Nolo.com: New COBRA rules