Unemployed? Keep Health Care With COBRA

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Lost your job? It’s a lousy way to start the New Year, but there’s a bit of good news: the federal government will pay 65% of the cost of continuing the health insurance plan you had with your former employer, and the subsidy now lasts 15 months instead of nine.

But be sure to get the ball rolling soon, as the application period expires at the end of February.

In December, Congress and President Obama extended the program, formerly set to end Dec. 31, and they increased the subsidy period by six months. The subsidy was established in February 2009, modifying the longstanding COBRA law.

COBRA stands for Consolidated Omnibus Budget Reconciliation Act of 1985, a law giving people the right to keep their health insurance coverage for up to 18 months after being laid off. Until last February, the former employee had to pay the entire cost, which could run up to thousands of dollars a year. But as part of the economic stimulus program enacted early in 2009, Washington set up the 65% subsidy.

For the average family, that should reduce health insurance costs to $410 a month from $1,137, according to a study by the Henry J. Kaiser Family foundation. The average individual should pay $144 a month instead of $398.

If you lose your job involuntarily, your employer has 14 days to notify you of your COBRA rights, and you then have 60 days to sign up. Talk to your former employer’s benefits office if you have not received notification.

To qualify, you must have been laid off between Sept. 1, 2008, and Feb. 28, 2010. You must have had health insurance through your employer, and the firm must still be in business and still offer insurance.

The subsidy phases out for married couples who earn between $250,000 and $290,000, and for individuals making $125,000 to $145,000. If you become eligible for Medicare or another group insurance policy, your subsidy will end.

The government was careful to cover people who might fall through the cracks, such as people who received the subsidy but then dropped their insurance coverage after the nine-month subsidy period ended. Those folks can get the additional six months.

In addition, people who started paying the full insurance premium on their own after the nine-month subsidy ended can get a refund equal to the remaining six months of subsidies, or they can have that amount applied to future premiums. Talk to the benefits staff to deal with these situations.

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