The recently enacted COBRA subsidy continues to cause headaches and questions not only for consumers, but also for employers/insurers who handle COBRA health care plans.
This confusion can end up costing insured former employees money, in the form of premiums they may not necessarily need to pay.
The Background
The federal stimulus plan enacted earlier this year included a subsidy to help people pay for health insurance though the Consolidated Omnibus Budget Reconciliation Act, or COBRA. COBRA lets you to obtain health insurance from your former employer at roughly the same group rate that the employer pays for up to 18 months after losing your job.
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The bills for this coverage can be overwhelming, especially for someone who just lost their job and is trying to make do on a reduced income.
The good news: there is now a 65% COBRA subsidy available for employees who were involuntarily terminated on or after Sept. 1, 2008. The former employee would only need to pay 35% of the premium, for a maximum of nine months. (After that point, they'd once again be responsible for paying the entire premium, if they want to keep the coverage.)
The Timeline
The subsidy was approved in mid-February, with employers required to notify eligible individuals about it by April 18.
Once they were notified, people who didn't already have COBRA coverage (or those who initially did but later dropped it) got a second chance: they had a 60-day period after notification in which to enroll.
Meaning, by mid-June most people who wanted the subsidy had signed up and sent their first payment. But soon (perhaps now), they may have gotten an unexpected surprise in the form of an additional bill.
