- COBRA Health Insurance - sanja gjenero
Without a means of steady income, many displaced workers elect to forfeit COBRA health insurance benefits because it's just too expensive. After all, an unemployed individual must pay 100% of the health insurance costs that were previously shared with an employer; a nearly impossible task for individuals with no means of income except for weekly unemployment checks.
The American Recovery Reinvestment Act of 2009 (Economic Stimulus Plan)
With the American Recovery Reinvestment Act of 2009, President Obama signed into law a health insurance premium break for unemployed individuals. Laid off workers who fit the criteria as outlined in the Economic Stimulus Plan can save up to 65% per month in COBRA health insurance premium payments.
Qualifications for COBRA 65% Premium Reduction
The worker must have involuntary lost her job. Individuals who quit a job are not eligible for the COBRA premium reduction under the Stimulus Plan.
The separation from employment must occur between September 1, 2008 and December 31, 2009.
Individuals with an adjusted gross income of less than $125,000 and couples filing jointly with an adjusted gross income of less than $250,000 fully qualify for the 65% COBRA health insurance premium reduction.
A sliding scale applies to individual filers whose adjusted gross income falls between $125,000 and $145,000 and couples who earn between $250,000 and $290,000. Individuals who fall within this category will sill realize a savings on their COBRA benefits, but will not be able to partake of the full 65% savings.
Workers who earned in excess of $145,000 as an individual or couples who earned in excess of $290,000 are not eligible to participate in the COBRA savings option.
How to Apply for COBRA Premium Reduction
Upon termination, the employer is required to provide each terminated employee information on how to apply for COBRA and the eligibility forms for participating in the COBRA premium reduction benefit. In the event an employer is negligent in providing such information, the terminated employee should contact the Human Resources Department directly and obtain the necessary information.
Individuals who were laid off between September 1, 2008 and February 16, 2009 and previously elected not to purchase COBRA benefits, or who purchased the benefits but dropped out because of the expense, now have now have an additional 60 days in which to elect coverage. Be advised, however, that opting into COBRA at a later date does not extend the coverage beyond 18 months past the date of original termination.
Limitations to the 65% COBRA Premium Reduction
While terminated employees are eligible to receive COBRA benefits for a period of 18 months, the 65% COBRA premium reduction is only applicable for 9 months. Therefore, the COBRA premium reduction remains in effect until the first of the following occurs:
- The individual becomes eligible for another health insurance plan
- The expiration of the COBRA benefits
- Nine months period of time
Latest COBRA Savings Information
Visit the Internal Revenue website for more information about The American Recovery Reinvestment Act of 2009 and the Department of Labor website for more information on the COBRA Continuation Coverage Assistance Under the American Recovery and Reinvestment Act of 2009.
Felicia A. Williams - Felicia A. Williams is a full time freelance writer with over 20 years of business writing experience.
