Approved Stimulus Bill Includes Employer Subsidy for COBRA Premiums

The stimulus bill approved Friday evening and now headed to President Obama for approval includes a provision for a nine-month 65% subsidy for COBRA premiums for people who lost/lose their jobs between September 1, 2008 and December 31, 2009.

More from Mike Haberman at HR Observations:

The bill is available to anyone involuntarily terminated since September 1, 2008.  If someone did not elect to have COBRA at that time they will be given a 60 day opt-in period.

The ex-employee would pay their portion to the employer or insurer and the employer would make up the remainder. The employer would then apply that amount as a deduction against payroll taxes. If that is insufficient to cover the COBRA expense then the U.S. Treasury would pay the remaining amount. This payment would continue for a period of 12 months, rather than the 18 months of COBRA. They would cease if someone became covered by other insurance, including Medicaid.

For more information, go to Mike's post and to this article at Workforce.com.

Postscript:  The purpose of this post was to alert my readers to this provision, not to provide a lot of detail on how COBRA works under this new provision.  In response to some of the more detailed questions I am receiving in the comment stream here, I'd like to provide a couple of links for those of you seeking more information.  If anybody can suggest other good links, let me know and I'll add them here.

Dear Workforce:  How Does the Stimulus Bill Change COBRA Provisions?

Premium Assistance for COBRA Benefits as part of the Stimulus Legislation at the Pennsylvania Labor & Employment Blog

COBRA Provisions within Stimulus Package at the Business Chatt Blog

The Department of Labor's FAQs for COBRA

 

Comments

[Rob]

If you are terminated and wife is expecting in April, will you be allowed to increase the benefits to include the new member of the family?

[Ann Bares]

Rob:

I can't answer that question - it will have to go to your HR representative or benefits provider.

Ann

[Hank]

COBRA allows for interim events like birth and death just like if you were still being subsidized by your employer.

[Catherine]

Is the former employer required to cover dependents who were on the plan at the time of termination, or only the eligible employee?

[Marcie]

Rob:

You may add your new born to coverage under a Qualifying life event and has to be done within 30 days of birth.

[Ann Bares]

Thanks, Hank and Marcie, for responding to the questions here.

[DAVID]

is this plan retroactive for premiums already paid and when does this become effective.

[Robert K]

What if I was laid off a month ago, signed up for an individual health care plan because I didn't want to pay the COBRA prices, and now with the new plan I can afford COBRA and I just got my election forms. Can I cancel the individual plan and elect COBRA?

[Linda M]

It seems that if one was laid off prior to September 2008, that there are no provisions for any Cobra extension--is that the final word?

[Ann Bares]

Thanks to all for sharing your questions (and, in some cases, answers) here. Note that I have added a couple of additional links to the original body of this post - where you can go to get additional information on the COBRA provisions. If anyone finds other good sources of answers on this topic, let me know or add it in the comment stream here so all can benefit.

[Sue]

My husband wss laid off last month and he had himself + our 2 childern on his company plan and I was covered under my employer.

It was too expensive to pay COBRA for them to continue w/his employer plan after the lay off, so I added he and the children onto my employer plan. Ubfortunately,I had to change to a plan w/lesser coverage and it is much more expensive than the 35% that he and the kids would have to pay for his old plan if he chooses COBRA now and I take them off of my plan. His co. coverage was much better than what we had to resort to w/my co.
Are we able to do this??

[Douglas]

According to the article, "If someone did not elect to have COBRA at that time they will be given a 60 day opt-in period." See if you fall under this provision. Since your husband was laid off last month, I assume that you may be able to.

[Brian Nguyen]

If I got lay-off in 11/2008 , I declined the COBRA from my company . So my wife added my name into her current health insurance from her company . My wife was voluntary departure from her company last month. Should I qualify for subsidy COBRA from my company and I could add my wife into it ?