Here's something to make sure all dislocated workers are aware of--under the American Recovery and Reinvestment Act, the federal government will subsidize up to 65% of COBRA payments for workers laid off between September 1, 2008 and December 31, 2009:
A new amendment to an important employment law was included in the American Recovery and Reinvestment Act, a law which you might know better as President Obama’s most recent Economic Stimulus package. Under that law, the United States government will pay 65% of an employee’s health insurance premiums for up to nine months after an employee is involuntarily fired or laid off. This new provision is part of the Consolidated Omnibus Budget Reconciliation Act (COBRA). It applies to individuals who are covered by COBRA who involuntarily lose (or lost) their jobs between September 1, 2008 and December 31, 2009. It even covers individuals who have already turned down COBRA benefits since September 1, 2008.
The government stipend toward COBRA benefits is reduced for individuals who make more than $125,000 per year and married couples who file joint tax returns and earn more than $250,000 combined. The benefits phase out completely for individuals who make more than $145,000 and for couples filing joint tax returns who earn more than $290,000 combined.
Note that workers who are eligible for some other form of health insurance coverage (as through a spouse) are not eligible for the subsidy. Also, those individuals who became eligible for COBRA from September 1, 2008 and Feb. 16, 2009, but who did not elect to take the coverage, will have a special eligibility period that began Feb. 17 and continues for 60 days, providing them with another chance to sign up for COBRA under the new law.
Workers access the subsidy as a "premium reduction":
ARRA treats assistance eligible individuals who pay
35 percent of their COBRA premium as having paid the full amount. The
premium reduction (65 percent of the full premium) is reimbursable to
the employer, insurer or health plan as a credit against certain
employment taxes. If the credit amount is greater than the taxes due,
the Secretary of the Treasury will directly reimburse the employer,
insurer or plan for the excess.
The premium reduction applies to periods of coverage beginning on or after February 17, 2009. A period of coverage is a month or shorter period for which the plan charges a COBRA premium. The premium reduction starts on March 1, 2009 for plans that charge for COBRA coverage on a calendar month basis. The premium reduction for an individual ends upon eligibility for other group coverage (or Medicare), after 9 months of the reduction, or when the maximum period of COBRA coverage ends, whichever occurs first. Individuals paying reduced COBRA premiums must inform their plans if they become eligible for coverage under another group health plan or Medicare.
Workers can calculate their subsidy using the COBRA calculator at eHealth Insurance and there are additional flyers and information on the DOL site, including this fact sheet.
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