If you are among the 1.5 million Americans who have lost their job since September 2008 and are paying to extend your company-sponsored health insurance under a law called COBRA, studies confirm what you already know: The payments are killing you. In 41 states, according to a recent survey by Families USA, average COBRA payments amounted to more than three-quarters of those states' average unemployment benefits.
But according to the fine print of the stimulus bill being hammered out between the U.S. Senate and House of Representatives, help is on the way -- for those who elected and are paying for health insurance under COBRA, and for many of those who took a look at the prospective price tag and said "no thanks."
The two bills differ in how generously they will help the unemployed with their COBRA insurance payments. But the House and Senate bills contain COBRA subsidy packages, and the provision hasn't been controversial. So it's considered a good bet to be part of the final package adopted by Congress this week.
Here are the details, provided by human resources consultants of the New York-based Sibson Consultants:
-- If you were or are laid off between September 2008 and December 31, 2009, the stimulus bill provisions on COBRA subsidies would apply to you.
-- The stimulus program would subsidize your COBRA payment (the House version would pay 65% of it, the Senate version would pay 50%) by giving the organization to which you pay your COBRA bill (typically your former employer) a tax credit. You would first have to pay your share of the monthly payment, then the stimulus package would kick in its subsidy payment (which is really a credit).
-- If you lost your job within the designated period and did NOT elect to continue your health insurance under COBRA, your employer must offer you the opportunity to sign up for extension of COBRA coverage as soon as the bill becomes law. For those who maintained their insurance under COBRA, the federal subsidies are not retroactive -- meaning, you won't get any reimbursements for the cost of COBRA payments you've already made. Whether you sign on once the bill becomes law, or have stayed insured under COBRA continuously since you lost your job, the subsidy begins when the bill becomes law.
-- Eligibility for the subsidy is a maximum of 12 months, and you lose eligibility for it once you become eligible for coverage under another group health plan -- other than health flexible spending accounts. (COBRA benefits must be provided for 18 months by companies who lay off workers, and the bill paid by the laid-off worker -- pre-subsidy -- is the equivalent of 100% of the cost of coverage, plus 2%.)
-- If you lose your job between the time the bill becomes law and 2010, and you haven't exhausted your 12-months of subsidy coverage yet, you'll be eligible for the subsidy.
Want to check the fine print? See the Library of Congress' posting of the House bill known as HR 1, including congressional actions -- the Senate's passage today among them --that have amended it. Care to weigh in with your representative or senator on the matter? Try here and here, respectively.
-- Melissa Healy