COBRA Changes: What You Need to Know


A bit of financial relief for those of us who are unemployed and uninsured (or could be this year): The price of COBRA’s bite just got smaller, 65% smaller, to be exact.

COBRA: A Brief History
For more than two decades the Consolidated Omnibus Budget Reconciliation Act, better known as COBRA, has allowed certain unemployed Americans and their families to receive health benefits from their previous employer’s medical plan (assuming your old company is still in business and sponsoring employees’ medical insurance…oh, and that you weren’t fired for stealing, corruption or other “gross misconduct”).

The traditional COBRA medical coverage lasts for up to18 months but, frankly, is a huge financial pain. Recipients usually pay the entire premium cost, a monthly expense their previous employer had once almost entirely picked up, plus a 2% administrative fee. Monthly COBRA premiums average up to $400 for single coverage and $1,200 for family coverage. For this reason, only one in ten Americans opts for COBRA.

COBRA: The New Deal
The recent signing of the new American Recovery and Reinvestment Act of 2009 (that's that $787 billion stimulus plan) means the government will subsidize 65% of the cost of COBRA for you and your family. The catch is that the subsidy will only last for nine months, just half the full COBRA period. After nine months, you have to go back to paying the full cost. But for many uninsured Americans, this may be much needed (albeit, temporary) financial (and health) relief. It’s estimated seven million Americans will qualify.

Your COBRA Questions, Answered!
While all the fine print is yet to emerge regarding the new COBRA subsidy, MainStreet has some answers to what are already becoming frequently asked questions.

I was laid off several months ago. Can I get COBRA with the new subsidy?
It’s possible. The subsidy applies only if you're laid off after Sept. 1, 2008 and before Dec. 31, 2009.

I lost my job, but didn’t apply for COBRA. I’m afraid my 62-day window to apply has passed. Am I out of luck?
No. You’ve still got time. With the new law, you’re still eligible to apply. You have an extra 60 days after getting notice from your old employer or plan administrator to sign up and get the subsidized health plan. This, of course, is provided that your old company is still offering health benefits.

What are the income requirements?
You’re eligible only if your personal income totals less than $125,000 per year. If you have a family and file jointly, your incomes must be less than $250,000 a year.

I’m already receiving COBRA coverage, paying the entire premium. Can I apply for the new subsidized plan or get a refund for my paid premiums?
If you are currently paying full COBRA premiums and were laid off on or after Sept. 1, 2008 you may also be entitled to the subsidy. Your previous employer will refund or credit you but not for any payments made before September 1, 2008.

For more health insurance resources, consult sites such as and


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