What the COBRA Insurance Extension Means to You
The Recovery Act established an employer-provided health insurance continuation subsidy for workers who involuntarily lost their jobs between Sept. 1, 2008, and March 31, 2010.
That continuation coverage is known as COBRA Insurance.
COBRA stands for Consolidated Omnibus Budget Reconciliation Act, which enacted health benefit provisions in 1986.
What Does COBRA Insurance Do?
COBRA Insurance provides you and your dependents the same group coverage that you had with your employer, however, you pay the premiums.
According to the US Department of Labor, COBRA Insurance provides certain former employees, retirees, spouses, former spouses, and dependent children the right to temporary continuation of health coverage at group health insurance rates.
COBRA Insurance is only available when coverage is lost due to certain specific events.
Unfortunately, if you are working for a small company, you may not qualify for COBRA Insurance.
COBRA generally does not apply to plans by employers with fewer than 20 employees.
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COBRA Insurance is usually more expensive than health coverage for active employees because you foot the entire bill whereas active employees get some part of their health insurance paid for by the employer.
That is, until the Recovery Act provided a subsidy.
What is the COBRA Insurance Subsidy?
The Recovery Act provides eligible workers who have lost their jobs with a 65 percent subsidy for COBRA Insurance premiums for up to 15 months.
Eligible workers pay 35 percent of the premium to their former employers.
The other 65 percent of the COBRA Insurance premiums is paid for by the employer who receives a tax credit from the IRS.
You must have been involuntarily separated from your job between Sept. 1, 2008, and Marc 31, 2010.
Of course if you make too much money the subsidy is reduced.
If your modified adjusted gross income exceeds $145,000 ($290,000 for joint filers), you do not qualify for the subsidy.
This subsidy ran out on March 31, 2010 – until now.
What are the details of the COBRA Insurance Subsidy Extension?
The Continuing Extension Act of 2010, enacted April 15, reinstated the COBRA Insurance subsidy.
Employees who are involuntarily terminated from employment between April 1, 2010 and May 31, 2010, may be eligible for a 65-percent subsidy of their COBRA Insurance premiums for a period of up to 15 months.
Employers must provide COBRA coverage to eligible individuals who pay 35 percent of the COBRA premium.
This is a great subsidy for those who lose their jobs and need health insurance.
At least for 15 months you’re only on the hook for 35% of the premiums!
Hopefully another job can be lined up by the end of that period.
Need More Information on COBRA Insurance?
If you’re looking for more info on COBRA, check out the US Department of Labor as well as the IRS.
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{ 6 comments… read them below or add one }
Howdy, I’m a new Yakezie member and thought I’d drop by and say hello. After reading this post it rememinded me of a question I have and am curious if you had any thoughts.
My wife is a teacher on contract which is not being renewed next year. This was a mutual agreement, partly because they no longer have that position, but partly because we’re having a baby and she doesn’t want to work anymore. I think we probably do not qualify for the COBRA subsidy, but i’m asking around so that I know for sure. The “involuntary separation” does cover non-renewal of contracts, but this happens to be a little on the voluntary side.
Any thoughts or speculation?
Coach – If the non-renewal technically falls during the extension period for the subsidy I don’t see why you wouldn’t qualify for it. This might be one of those “interpretation of the laws” things you run up against and should probably get a good CPA to help you work through that. Thanks for the question!
Thanks Jason, I will be grilling my account soon!
accountant! lol….always tough to edit your own comments.
Can someone help me? I am laid off as of June 10, 2010, will I not be able to get this COBRA subsidy? I am 63 years old and too young for medicare. Any advice would be helpful as I can’t afford COBRA on my own.
Cttsp5 – I am sorry to hear about your situation. I don’t know your whole situation, but from what it sounds like – it’s a tough spot to be in. Without knowing all the details, all I can say is that you should check into some individual health insurance, perhaps get a higher deductible plan and see what you can afford for your budget. You’ve got basically a two-year gap to try to fill. If you can make it to 65, you should be OK. There are also some short-term plans that are a little less expensive out there too that you may want to check out.