Karyn Schwartz, a senior policy analyst at the Kaiser Family Foundation, cites another advantage for those who can afford COBRA for the full 18 months: Every state is required to offer at least one health plan—even though potentially costly—for those residents who have exhausted COBRA.
Hoving, who is aggressively job-hunting, believes his networking efforts will pay off long before the nine months expires. For those not as fortunate, the subsidy will serve as a helpful but temporary Band-Aid, Fronstin says. “When you think about it, when Band-Aids come off, they hurt,” he says. “When this subsidy ends, it’s going to hurt.”
FAQ on the New COBRA Federal Subsidy
Who is eligible for the cheaper COBRA payments?
In general, to qualify you must:
- Have been laid off involuntarily between Sept. 1, 2008, and Dec. 31, 2009.
- Earn an adjusted gross income of no more than $125,000 individually or $250,000 for joint filings; beyond those thresholds the subsidy is phased out.
- Have worked for an employer with 20 or more employees.
- Not have access to Medicare or a spouse’s insurance plan.
Will my employer tell me if I’m eligible?
Your employer has until April 18 to let you know you are eligible to enroll. If you haven’t received notice but think you are eligible for the subsidy, call your employer to ask when you’ll get the notice and application.
If I qualify, when will my health insurance costs go down?
For most people with COBRA plans, the subsidy started March 1. Laid-off workers who pay the full amount in March or April will have the difference reimbursed or refunded as a credit.
How long will the lower payments last?
Your subsidized premium should last up to nine months unless you become eligible for Medicare or another group health plan (such as a plan sponsored by a new employer or a spouse’s employer), or you reach the end of your maximum COBRA coverage period. There’s also some possibility that Congress will extend the subsidy.
What if I can’t swing the full insurance payments while I’m waiting for the paperwork to come through?
Mail in the subsidized amount by certified letter, saying you believe you qualify, recommends Mary Ellen Signorille, a senior staff attorney for AARP Foundation Litigation.
Where can I find out more?
For more details, check with your former employer or consult the U.S. Department of Labor website. AARP also provides information on COBRA.
Is there a way to get COBRA coverage if I work for a small business?
In some states, residents laid off from businesses with fewer than 20 employees might be able to extend health coverage, sometimes called mini-COBRAs. The Kaiser Family Foundation provides more state-by-state details.
Charlotte Huff is a health and business writer who lives in Fort Worth, Texas.