Stimulus bill delivers COBRA health coverage relief
Posted on 13 February 2009
Permanent URL of this article: http://retirementrevised.com/health/stimulus-bill-delivers-cobra-health-coverage-relief
The final economic stimulus bill set to be signed by President Obama will include a subsidy on COBRA health insurance coverage for laid-off workers.
Update: details on how the subsidy will work.
UPDATE: The U.S. Department of Labor’s hotline can provide advice to individuals trying to sort through the complexities of the COBRA subsidy. Learn more here.
COBRA is the federal law that provides for workers to hold on to their health insurance benefits for 18 months after a job loss. This is an especially acute problem for people out of work who are close to retirement age and short of age 65, when Medicare coverage begins. Simply put, this is because older people tend to use more health care services.
For many, COBRA is the only insurance option after a layoff or forced retirement, but the costs can be astronomical. A study by non-profit advocacy group Families USA finds that COBRA premiums average $388 per month for individuals, and $1,069 for family coverage. That’s equivalent to 30 percent of unemployment insurance benefits for individuals, and a whopping 84 percent for family coverage.
Final details of the COBRA relief package have been fluctuating as the House and Senate negotiated final language of the stimulus bill this week, but here’s how The New York Times describes the final deal this morning:
Now, the federal government will subsidize 65 percent of the premium for up to nine months. To be eligible, you need to have been forced out of your job between Sept. 1, 2008, and Dec. 31, 2009. Also, your income in the year you receive the subsidy cannot be more than $125,000 for individuals or $250,000 for married couples filing their taxes jointly.
If you lost your job after Sept. 1, 2008, and declined Cobra coverage, you’ll now get another chance. Call your former company in the next two months to find out how this will work.
Some had been hoping the bill would mandate that employers also let laid-off workers retain their COBRA coverage longer than 18 months, but that didn’t happen.
The bill also includes a one-time payment of $250 to Social Security beneficiaries, railroad retirees and veterans receiving benefits from the Veterans Affairs department. State government retirees not eligible for Social Security would also get the $250 payment. This would come in the form of a refundable tax credit to be paid within 120 days of the bill’s signing. Reuters has a nice summary of the bill’s tax provisions.
February 14th, 2009 at 5:40 pm
That arbitrary 9/1/08 start date for being unemployed is absurd. The actual recession and resultant lay-offs started well in advance of that. Doesn’t it make more sense to help those who have been unemployed longer and will therefore run out of their COBRA coverage even sooner?? It was also too bad that the Senate managed to get the extended COBRA coverage for those laid-off employees over 55 pulled from the House bill. Here again, those that were laid-off and over 55 will have all the more issues with getting affordable medical insurance coverage (if they can get it at all, especially for those with pre-existing conditions). Therefore, those over 55 who were laid-off in advance of 9/1/08 essentially get screwed twice with the COBRA plan that is in the final stimulus bill about to be signed by President Obama.
February 16th, 2009 at 9:18 am
Am I understanding that even though I was let go from my Full time position on November 5 2008, but am 58 I will not qualify for the Cobra stimulus benefit? If so WOW your right that Really absurd. Correct getting any other affordable coverage is not possible…
February 16th, 2009 at 10:01 am
My heart sank as I read the COBRA subsidy details, especially the 9.1.08 start date. I was laid off 7.1.08 and remain unemployed. My COBRA is $786/mo. 65% would have been a very important $510/mo.
I’ve been surviving off of my IRA an it will run out in 2-3 months.
I can’t sell my house, I can’t make the mortgage payment anymore. The bank is considering accepting deed in lieu of forclosure.
Adding insult to injury, I’m 55.
February 16th, 2009 at 10:42 am
The House provision extending coverage to people over 55 was a huge disappointment to many who were hoping for something more comprehensive. It was killed as a result of lobbying by business groups, who objected that such an extension would increase their costs. Even though employers don’t pay the premiums for laid-off workers, business argued that their participation would lead to higher premiums for all, since older workers tend to be the most intensive users of health care and therefore boost overall premium expenses. This argument is bankrupt, of course, because it runs counter to the basic definition of insurance–shared risk by a pool of participants.
My perspective: we are not going to see a real solution to this problem until and unless we get comprehensive health care reform, including the universal coverage President Obama promises to seek. The painful reality is that many uninsured, jobless Americans were left out in this first round of reforms.
Final thought: for readers trying to figure out how to deal with the insurance gap, please see this page, which details some options that may be available to you, depending on your situation:
http://retirementrevised.com/column/how-to-deal-with-the-pre-medicare-gap-years
February 18th, 2009 at 1:07 pm
OK, So does anyone know how this will be implemented? Where do we “sign up”?
February 19th, 2009 at 12:45 pm
Yeah, I became a laid-off Aug. 18, 2008, just a couple of weeks short of the Sept. 1, 2008 qualifying date. Where I worked many of my co-workers were losing their jobs long before I did, and I’m sure similar circumstances exists for many other laid-off workers. The qualifying date should be backed up all the way to at least Jan. 1, 2008, if they really want to be fair about it, and the time of coverage should be extended to at the very least a full 24 months. This is far from a normal economy and job market, where if you lose your job it takes on average about three months to get another one. That’s just not reality.
February 21st, 2009 at 12:22 pm
how does this help people who don’t have cobra (e.g. those who aren’t offered health insurance. or employers who aren’t bound by ERISA)…. or do they just get (as usual) screwed?
America needs comprehensive health insurance reform. this is less than a band aid.
February 24th, 2009 at 6:18 pm
This issue would be mute if President Clinton wasn’t shut down by Republicans spouting off about “Socialism,” when he tried to get universal health care. We would all be covered. All our families, our parents, everyone… Barak wants the same things and the republicans do not want all Americans to receive health care. Well, that is unless you can afford it or are lucky enough to work for a corporation that subsidizes it for you and if you aren’t then you don’t get health care. Aren’t we lucky? Socialism is only allowed when the tax payers pay CEOs and their like bonuses for messing the world up. In that case, it is fine but not hard working families.
That is the “American way” so I am told…
best of luck to us all.
February 25th, 2009 at 4:41 pm
I’ve been calling all over trying to find how to sign up. The COBRA administrator for Randstad Professionals doesn’t know, just got my form today and it’s due by before 3/1/09. The cost is $509.53. What good is this if there’s no way to get the benefit? If anybody knows, please make it known.
February 26th, 2009 at 10:11 am
I lost my job August 29th! My COBRA is $950 for my husband and I. I’m applying for jobs with benefits, but I’ve been actively applying since September and received only one interview. I am now looking for temporary work. I support my elderly mother. I’m in my early 60’s. Hopefully, universal health care might be passed. If I do no get work, I will need to buy less expensive health insurance.
February 27th, 2009 at 9:39 am
Yes, i was 61 and let go from my position on june 27th 2008. this was a few days and two months for cobra relief. I am currently paying $1286.22 per month for my cobra health insurance for my wife and i. To add insult to injury my wife is not provided health insurance and because of budget cutbacks her salary was reduced by 25%.
Also, i have lost 40% of my IRA value when i thought i had that to fall back on. Another option is to sell my home but there is no market and i look at loosing from 15% to 25% of the value of my home.
In order to afford anything i an looking at renting a home and reducing my living style significantly.
Everything that could have gone wrong did.
February 27th, 2009 at 7:28 pm
Millions of Americans who lost their jobs prior to September 1, 2008 could not afford Cobra. Millions more elected Cobra but have now depleted their resources and can not continue on. Still millions more with pre-existing conditions who rely on cobra to bridge the 18 month gap between their former employers insurance and their state’s high risk insurance pools are struggling to pay their premiums every month to prevent being locked out of insurance permanently.
Please join us in asking Congress and the Obama administration to eliminate the arbitrary September 1, 2008 cut-off date and 9 month limitation of assistance by signing our petition on ipetitions under cobra reform and telling your friends about our efforts.
February 28th, 2009 at 9:46 am
Yup. I’m 61, and keeping insurance until Medicare at 65 is going to consume what’s left of my IRA. At 65 I’ll have Medicare but will spend the rest of my life eating beans and rice and living in whatever shelter my SS check will permit. No market in the US for 60+ software engineers. Actually, not much market in the US for engineers of any age. My last task was moving all my projects to engineers in Russia and India.
March 3rd, 2009 at 4:53 pm
I understand that a government paid COBRA subsidy may be available to individuals
that were laidoff after a certain date. What are the emeployers obligations, if any, under provisions of the stimulus package and what about an employer that arbitrarily discontinues an insurance benefit plan due to the economy but the employee remains employed
March 3rd, 2009 at 5:45 pm
The new federal subsidy of COBRA health insurance premiums for some laid off workers has provoked a great deal of confusion–at least in the short-term–among people trying to figure out if they qualify for the benefits. Many have left comments and questions here at RetirementRevised, and while we’d love to help, we’re not capable of providing one-on-one advice.
However, we have been digging around looking for reliable sources of help, and have identified two.
See:
http://retirementrevised.com/health/where-to-go-for-assistance-and-info-on-cobra-subsidy
March 9th, 2009 at 12:25 pm
Like others who posted comments, my heart sank because I was laid off on May 30, 08. My COBRA payment is nearly $500 per month. Luckily caring parents in their 80’s (who have substantial savings, but have been hit hard by the stock market) have been paying my payments. Luckily, the Commonwealth of VA has a very good ins. program that covers my child. I have been living on savings, modest child support, and unemployment benefits (which frankly, are a joke in terms of providing for people out of work — they only allow one to make $49 per week before it starts coming off the weekly benefit — it discourages anyone from doing some sort of work to help out). I have made all my mortgage payments and car payments on time. So like many, I am not being irresponsible in this very trying time. I am in a profession that is extremely competitive (always has been). If a particular institution’s budget isn’t frozen, it looks like I’ll have a good job next fall. But I’ll have high moving costs and I’ll have to deal with a mortgage for a house that I’ll have to leave behind and likely, won’t be able to sale. So the word of help on these COBRA payments was very sweet music — until I read about the restriction on when one had to be laid off. What bad turn of luck. I guess it is too much to think that Congress will do something to correct its unfortunate mistake.
April 2nd, 2009 at 8:09 pm
Can any one tell me when the program will be effective. My boyfriend got a letter from his Cobra plan but I never did. I called my cobra provider and they told me the Goverment wont tell them until after 4/17 who is available and letters will then be mailed to us. I would like to know when is effective and is this going to be re-troactive. Will I get credit for what I have paid? I dont think they are telling me the truth because like I said I know people are getting letters already!??
April 3rd, 2009 at 1:39 am
My concerns are a reduction of hours due to the employer. Does this plan cover a reduction of hours?
April 4th, 2009 at 2:02 am
I was laid off on Monday. My income exceeded the qualification for 2008 but obviously won’t exceed it for 2009, as I no longer have a job. Which year do they use to determine if you are eligible by your income, 2008 or 2009?
Just because I made a high income doesn’t mean I have extra money. I am supporting two elderly parents and I have twins in their first year of college.
April 10th, 2009 at 8:29 pm
I have a real problem and would like some help. I was laid off August 21 2008. I was able to take care of my family and was fortunate to make 6 figures. Now I stock shelves at the local Shop Rite at night for $9.00/hr. I use my 401K each month to pay Cobra $1,500 for medical benefits. What can I do since I cannot receive the 65% savings? Please if anyone has any ideas please email me.
Thank you,
Tony
July 28th, 2009 at 9:46 am
My 54 year old brother became seriously ill in March, 2008. After being terminated from his job because he was unable to perform his duties, he was given the option of picking up Cobra benefits , at a cost of $400+ a month. He will begin getting permanent disability payments from Social Security next month. These Cobra payments will cost him approx. 30% of his monthly check!!!!!!!!! The insurance administrator of the union determined that he was NOT entitled to the Obama 65% relief program because he never collected unemployment(when he applied ,he was honest enough to tell them that he wasn’t able to seek employment and was,therefore, rejected to collect anything). His savings have been exhausted at this time …………………Just tell me this………….. He involuntarily lost his job: tried to keep up his insurance premiums and is now being told that he doesn’t qualify for some relief!!!!!!! does this make any sense to anyone??????? Just WHO IS being helped and being given relief???????? Perhaps only a politician can answer this question…………?????????????
August 21st, 2009 at 6:35 pm
I would like to know if i qualify for the Cobra 65%. I was not laid off but had to go on maternity leave for 3 month. My job does not cover for maternity leave because were under 50 employees. They made me pay Cobra for 3 month. The State did not pay me much for disability and i had to put additional money to pay my $780 cobra a month. Please let me know if i qualified for the cobra bill president Obama pass that i didn’t have to pay full cobra. Or was this just for laid off employees. Please advise.
September 9th, 2009 at 4:32 pm
I have been on Cobra since August 1 paying $975 each mo. for my husband and myself. It runs out in Feb. 2010 and I have inquired about Health coverage and discovered that both me and my husband have “pre existing conditions” which by the way anyone over 50 will have! So getting coverage is not an option (especially in DE). It would definately help if Cobra was extended!!! I wouldn’t mind paying the amount if I could just continue with the coverage I have now. That doesn’t look like it will happen either. Resulting in yet more people without health insurance. What are the people between 60 - 65 suposed to do. Try to find a full time job at this age so you can get health coverage!
November 3rd, 2009 at 9:42 am
I am 54 years old and I am currently on COBRA and it is going to run out. I started COBRA on March 13, 2009 and I was told it would end in November 09. Can I get an extension? If so, how do I go about it. I called the company benefits people and they said no. Some people say they have been on COBRA for 18 months. I have bearly made 9 months.
Please advise.
Judy