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Don't Miss Out on a COBRA Health Insurance Premium Subsidy! Posted: June 10th, 2010

By Maryalene LaPonsie

With unemployment reaching double digits, many families are making do without jobs and, subsequently, health insurance. Nearly two-thirds of Americans receive health insurance through an employer. So, if you received a lay-off notice, you're probably wondering how you'll pay bills and protect your family's health.

Although COBRA health insurance is available to laid-off workers, the expensive premiums often keep this coverage out of reach. However, as part of the 2009 federal stimulus package, families can receive a subsidy to help maintain health coverage.

What Is COBRA Health Insurance?

In 1986, Congress enacted the Consolidated Omnibus Budget Reconciliation Act (COBRA). The law allows workers leaving their employment to continue participation in the employer health insurance plan for up to 18 months. Individuals working at businesses with at least 20 employees are eligible for COBRA coverage.

However, former employees must pay the total cost of the plan premium. Even with group rates, employer-sponsored health insurance premiums can be quite expensive. Despite COBRA's high price tag, it's often cheaper than comparable individual health plan premiums. COBRA also provides group coverage for individuals with preexisting conditions who may not be able to find health coverage elsewhere.

COBRA Health Insurance Premium Reduction

To make COBRA health insurance more affordable, the federal government approved a series of bills that provide premium subsidies to eligible families. These subsidies mean families can purchase COBRA coverage for only 35% of the premium price.

To be eligible for reduced COBRA health insurance premiums, you must meet the following requirements:

  • Your employment terminated involuntarily
  • The involuntary termination occurred between September 1, 2008 and May 31, 2010
  • You are not eligible for another group health insurance plan or Medicare
  • Your income is below $145,000 for individual filers or $290,000 for joint filers
  • The application for COBRA benefits must be received within 60 days of termination

Once eligible, you can receive the COBRA premium subsidy for up to 18 months. The COBRA subsidy is only available for periods of coverage, a month or shorter period that the plan charges a COBRA premium, which began on or after February 17, 2009.

Employers should notify all eligible COBRA participants. If you believe you are eligible but have not been notified, contact your previous employer's human resources department. All paperwork required for the COBRA subsidy should be available through that office.