A defense-spending bill signed into law Dec. 19 expands a subsidy for unemployed workers who want to continue their former employer’s health insurance coverage. What does this mean exactly? In USA Today, Sandra Block maps out the benefits and regulations available for you in 2010.
The economic stimulus package enacted by Congress last year subsidized 65% of COBRA premiums for unemployed workers for up to nine months, starting in March 2009. But with unemployment still above 10% at year’s end, Congress decided to extend and expand the benefit. Under the legislation:
•Individuals who are eligible for the subsidy will be able to receive it for an additional six months, for a total of 15 months.
•Workers laid off between Sept. 1, 2008, and Feb. 28, 2010, are eligible for the subsidy. The original cutoff was Dec. 31, 2009.
The subsidy has triggered a significant increase in COBRA enrollment, says Karen Frost, health and welfare outsourcing leader for Hewitt Associates. From March to November, the number of workers who signed up for COBRA increased 20 percentage points over the previous six-month period, when no subsidy was available, according to Hewitt Associates (see chart).
Hewitt Associates estimates that subsidized COBRA premiums cost the average worker $3,000 a year, vs. $8,800 a year without the subsidy.
Second chance
The extension is retroactive, so unemployed workers who lost their subsidy before the legislation was enacted are still eligible for six more months of subsidized premiums, according to the Department of Labor. The government is providing a grace period for workers who let their coverage lapse, says Kathryn Bakich, senior vice president and head of the health care compliance practice at Segal Co. To resume subsidized COBRA, you must pay the back premiums at the reduced rate by Feb. 17, or 30 days after receiving a notice from your plan administrator, whichever is later.
For example, suppose your subsidy expired in November and you didn’t pay your COBRA bill for December. Your employer is required to notify you that you have the opportunity to restart COBRA for six months, Bakich says. As long as you pay the reduced premium for December, you won’t have a break in your coverage, Bakich says.
If you paid the entire premium to continue COBRA after your subsidy ended, you should be able to get some of that money back. Contact your plan administrator or employer about receiving a credit toward future COBRA premiums or a refund, Bakich says.
If your COBRA subsidy hasn’t expired, you don’t have to do anything, Frost says. You’ll probably receive a notice from your plan explaining the six-month extension, she says.
Eligibility rules
The legislation extending the COBRA subsidy didn’t change the eligibility requirements for the benefit. You’re ineligible if:
•You left your job voluntarily. The subsidy is limited to individuals laid off between Sept. 1, 2008, and Feb. 28, 2010. If you qualify, your family is also eligible for subsidized COBRA coverage.
•You have access to coverage through your spouse’s health insurance or Medicare.
•Your employer didn’t provide group coverage. In addition, the federal COBRA rule applies only to companies with at least 20 full-time employees.
Forty states and Washington, D.C., have “mini COBRAs” that cover small employers, but the coverage may be more limited than that required by federal law.
•Your employer has gone out of business and is no longer providing group coverage.
For more information about the subsidy, go to www.dol.gov/COBRA. To talk to a DOL benefits adviser, call 866-444-3272.
Tags: COBRA, consumer, economy, healthcare
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