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COBRA Subsidy Extended
The American Recovery and Reinvestment Act of 2009 (ARRA), as amended, provides for premium reductions for health benefits under the Consolidated Omnibus Budget Reconciliation Act of 1985, commonly called COBRA. Eligible individuals pay only 35 percent of their COBRA premiums and the remaining 65 percent is reimbursed to the coverage provider through a tax credit. To qualify, individuals must experience a COBRA qualifying event that is the involuntary termination of a covered employee's employment. The involuntary termination must generally occur during the period that began September 1, 2008 and ends on May 31, 2010. (An involuntary termination of employment that occurs on or after March 2, 2010 but by May 31, 2010 and follows a qualifying event that was a reduction of hours that occurred at any time from September 1, 2008 through May 31, 2010 is also a qualifying event for purposes of ARRA.) The premium reduction applies to periods of health coverage that began on or after February 17, 2009 and lasts for up to 15 months.
Period of Coverage
Currently, under the act and its extension, for up to 15 months, eligible unemployed workers will need to pay only 35 percent of their total COBRA premiums to continue the health coverage that they had through their jobs, and the federal government will reimburse employers or health plans for the remaining 65 percent of premiums. Assistance eligible individuals (AEIs) qualify for premium assistance if they were:
- Involuntarily terminated from employment at any time from September 1, 2008 through May 31, 2010,
- Eligible for COBRA or state continuation coverage, and
- who elects continuation. The law also includes income thresholds that prevent or limit a person’s qualification for the subsidy.
The Act extended subsidy eligibility through May 31, 2010. The Act also provides subsidy to an AEI who is involuntarily terminated from employment from March 2, 2010 through May 31, 2010, following a qualifying event that was a reduction in hours that occurred at any time between September 1, 2008 and May 31, 2010. AEI’s who are terminated following a reduction in hours are given a second election opportunity if they did not elect continuation coverage when it was first offered, or elected but subsequently discontinued continuation coverage.
The subsidy will end when the AEI:
- is eligible for coverage under any other group health plan; or
- is eligible for benefits under Medicare; or
- has exhausted his/her maximum period of COBRA or is no longer enrolled in COBRA; or
- has received 15 months of premium subsidy.
If you have any questions regarding COBRA and updates on the subsidy, please contact MDSIS-Spring at (800) 821-6033. |
