Friday, July 25, 2014  
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Health Insurance for Individuals

COBRA in the American Reinvestment Recovery Act

Editor’s Preface: The new American Recovery and Reinvestment Act (ARRA) is a revolutionary step in addressing our most vital economic challenges. A significant portion of the money doled out by the ARRA ($59 billion) will go towards immediately addressing the health crisis. This is the second part in a two-part series on subsidies for COBRA in the ARRA. We have also extensively covered this subject in “COBRA Health Coverage in a Bad Economy” and “Stimulus Package and COBRA Health Coverage.” You can find Part 1 of this series at: “COBRA Health Subsidies and the Economic Recovery Act

COBRA Subsidies and Your Health Insurance

Knowing who is and isn’t qualified for this 65% COBRA subsidy coverage can get a little sticky. The ARRA only provides the subsidy to AEI, or “assistance eligible individuals.” Who qualifies as one of these special AEI’s? Anyone who is eligible for COBRA coverage on or before September 1, 2008 or on or after December 31, 2009. This is an interesting way of looking at things, because wouldn’t it just be simpler to say anyone on or after September 1, since December 31 falls after that date? Moving on. An AEI is also someone who chooses to use COBRA during the original COBRA period, or during a special period of coverage. Just what is a special period of coverage? This special election period begins on the date of enactment of the ARRA and ends 60 days after the person’s health plan administrator provides the required notice to the individual. You also have to be covered by COBRA via an involuntary termination (covered in my last post) by your former employer’s health insurance coverage plan.

So now that we have a clearer idea who is and isn’t eligible for coverage, let’s look at costs. This subsidy will only require an individual to pay 35% of what they would normally be required to pay. So if you were looking at paying $1000/month for COBRA coverage, your health plan can only require you to pay $350. The federal government will then turn around and reimburse your former employer for the remaining 65% of your COBRA coverage fees. When could you lose access to this subsidy? Nine months from when you begin accessing it, if you become eligible for another groups’ health care plan (either through a new employer or through purchasing your own health insurance plan) or end of the maximum COBRA coverage period required by law, a maximum of 18 months. This seems a bit confusing. 9 months seems to be the consensus on how long you can cash in on this subsidy for. Why, then would there be information out there saying that you could extend this subsidy to the maximum COBRA coverage period nearly twice as long? I did find information on what two distinct groups are allowed to access this extension, and they’re very specific, so pop the phrase “How does the ARRA extend the COBRA coverage period” into Google and you get some great answers.

How would you know if you were eligible for COBRA in the first place? Unfortunately, if you haven’t been notified by a current or former employer, you might not be eligible. The company that I work for sent COBRA notices to employees a few weeks after I started working there, and have continued to send updated information as it becomes available. Your employer is required by law to let you know if you are eligible for COBRA through your work’s health insurance plan.

All in all, is this new legislature a good thing? Is it going to help where COBRA has only hurt the pocketbooks of Americans before? I’m hopeful. I’ve seen nothing but complaints of those who want to access COBRA but are astounded by the costs. This 65% break will definitely help ease the burden, but in this economy, 9 months’ cushion might not be enough time to find a new job with better, more affordable health insurance. Only time will tell how the ARRA and its subsidy will help those in need.

Creative Commons License photo credit: CuriousDanielson

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11 Responses to “COBRA in the American Reinvestment Recovery Act”

  1. Stefanie Oakes Says:

    Who can I contact about this COBRA subsidy? I just received my COBRA paperwork from my employer (due to termination).

  2. DENNIS zENOR Says:

    What requirements are there for cobra extensions. I started on cobra 3-1-08 and my cobra will end 1-10-09. I will not be 65 for 7 months after 1-10-09. Your help will be appreciated.
    Thank You

  3. margaret smith Says:

    i just got my cobra paperwork. they wanted me to pay march.april and may. ive been unemployed since nov 2008. according to my letter the first payment was due in march. i really cant understand what took them so long. i refused it.

  4. Eugene Onegin Says:

    what is your mailing add ress?

  5. Loretta Stevens Says:

    I worked for City of Parkville, was fired 12/31/2008, offered Cobra but could not afford it on unemployment, but was told that if the 65% assistance legislation was passed, I would receive another offer for coverage. The subsidy ruling was passed but I never received notice or offer of coverage. Why?

  6. Debra Sig Says:

    My daughter graduated from college in May 2009 and has not been able to find a job yet.
    She became ineligible for insurance through my work policy as of her graduation date.
    Since May she has been un-insured.
    Is she eligible for COBRA or any other program?
    I don’t know how to guide her to get medical insurance.
    Where does she apply?
    Please help.
    THank you.

  7. stacy mitchell Says:

    I just received a notice from my previous employer that my Cobra coverage was going to end in Dec. This is only 6 months after I was terminated. Is this true, or do I have another 3 months.
    Thank you

  8. Linda Scriba Says:

    I have been on COBRA since July 1, 2008. I have received notice that It will end on Dec. 31, 2009. Am I eligible for the 65% subsidy ? I send my premium payments to the insurance company that handles the insurance for the company my husband worked for. It seems like they should have informed me if I only had to pay 35% of my premiums. I’m very distressed to learn that I may have overpaid by so much money. I’m wondering if I can get any of it back. Any info you have would be appreciated.Thank you.

  9. Kathleen Caruso Says:

    My husband lost his job and we have been paying 100% full payments to CBIZ Cobra for 18 mos and as of Nov 18 @ midnight it expired!I Just found this website and learned of these new benefits. We NEVER received ANY info or contact from anyone about these changes that we should have only been paying 35% not 100%. Would this not have been their responsibility to inform us? They were very timely in contact when payment was due though! Are we eligible for ANY refunds for ANY period of time that we paid in full. We are HUNTING med ins now and cant believe how expensive ALL these plans are. PLEASE, PLEASE contact me ASAP with ANY help or suggestions that could help us w/these horrible expenses for medical. Hunting for med insurance has been a full time job and a foreign language to us and has caused GREAT stress and FEAR in our household. Also, is there ANY way to extend the Cobra medical benefits that we have been covered for the last 18 months. ANY support, advise or directions that you could pass along to me would be GREATLY appreciated. These are scary and tough times for all and any support would be appreciated. I look forward to your response.
    Thank You, Kathleen C

  10. Barbara Says:

    If you are eligible for COBRA under your previous employer and it is possible to obtain med. ins. through your spouse’s employer, are you disqualified for the Cobra and subsidy? Thanks

  11. pat canady Says:

    i was working for one of the gm dealerships that was closed down . we were told that there was no cobra ins. i’m 61 and can not get insurance. is there any help for people like me.

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