COBRA Premium Subsidy Expires

UPDATED July 14, 2010 Americans involuntary terminated after May 31, 2010 who would be eligible for COBRA health insurance will NOT be eligible the CORA subsidy under the The American Recovery and Reinvestment Act of 2009 (ARRA), as amended as amended several times. According to this statement by Assistant Secretary of Labor Phyllis C. Borzi:

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.

What is COBRA?

COBRA gives workers and their families who lose their health benefits the right to purchase group health coverage provided by the plan under certain circumstances.
If the employer continues to offer a group health plan, the employee and his/her family can retain their group health coverage for up to 18 months by paying group rates.

COBRA generally does not apply to plans sponsored by employers with fewer than 20 employees. Many States have similar requirements for insurance companies that provide coverage to small employers. The premium reduction is available for insurers covered by these State laws.

Changes Regarding the Availability of COBRA Coverage Under ARRA after May 31, 2010

ARRA provides a COBRA premium reduction for eligible individuals who are involuntarily terminated from employment through the end of May 2010. Due to the statutory sunset, the COBRA premium reduction under ARRA is not available for individuals who experience involuntary terminations after May 31, 2010. However, individuals who qualified on or before May 31, 2010 may continue to pay reduced premiums for up to 15 months, as long as they are not eligible for another group health plan or Medicare.  Unless the sunset date is extended by Congress, individuals who lose their jobs after May 31, 2010 will not be eligible for the subsidy.

The US Department of Labor Released today an updated fact sheet on COBRA, the COBRA subsidy and eligibility.

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