labor lawAdivision of labor law center

The 2009 COBRA Premium Reduction under the ARRA affects millions of laid-off workers, and employers are being deluged with questions on it. Here are some answers to the most frequent questions.

 

COBRA, the Consolidated Omnibus Budget Reconciliation Act, permits employees to extend their group health insurance after being laid off or terminated. The COBRA Subsidy reduces premiums for workers who are out of work, though no fault of their own. COBRA regulations are issued through the U.S. Department of Labor.

 

How much is the COBRA premium reduction?

The COBRA premium reduction is 65%, meaning that the federal government picks up 65% of the tab, while the employee pays just 35% of the usual COBRA premium.

 

When should employees be notified of the COBRA Premium Reduction? Employees laid off between September 1, 2008 and February 17, 2009 must be informed in writing of the premium reduction by April 17, 2009.  Employees then have 60 days after receiving notice to opt to sign up for COBRA under the reduced premium.

 

Employees who are terminated between February 17, 2009 and December 31, 2009 must be notified of COBRA within 60 days, just as usual. However, that notification will include the reduced premium.

 

Any laid-off worker who has not received notification at this point, should contact both the previous employer and the insurance administrator.

 

Can employees who initially declined COBRA sign up now, with the reduced premium?

Yes, an employee who was terminated between September 1, 2008 and February 17, 2009 can sign up for COBRA with reduced premiums during the special election period. This is true, even if the employee initially declined COBRA coverage when terminated.

 

How long does the COBRA Premium Reduction last?

The COBRA subsidy lasts for a maximum of 9 months. While it is possible that this could be extended, there has been no discussion of doing so at this point.

 

How long does COBRA last?

Most laid-off employees qualify for COBRA for up to 18 months. However, only 9 of those months would be at the reduced premium.

 

Where can I get more information?
Both employers and employees can get more information on the COBRA Subsidy by calling a U.S. Department of Labor Benefits Advisor at 1.866.444.3272

 

 

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1. Posted by: Rob

   An employer is requiring laid off employees to Opt-In to the ARRA Cobra subsidy despite having opted into the COBRA coverage during the time period specified in the ARRA bill.

   http://www.adpcobrafsa.com/cobra/participant-information

   They posted the new “Opt-In” form on April 8th on their website, changing the substance of the information they had on the page which stated that the subsidy would be automatically applied and credited or refunded back to people who paid their premiums in March. I was one of the people who paid his premium in March and am just finding out now about this ridiculous opt-in requirement they now have retroactively added onto the original sign-up for Cobra benefit subsidies under the ARRA

2. Posted by: Amelia

   Hi Rob! Actually, this looks completely legitimate to us. An employee might opt out of the COBRA subsidy for a number of reasons. Her family income might be too high for her to qualify, she might be eligible for other insurance, or she might just object to the bail-out in general. The employer cannot know these details, so it is not appropriate for the employer to *automatically* implement the COBRA premium reduction (subsidy.) The employee does need to sign off on it. Most Americans are more than willing to fill out a form, to have the government pay 65% of their health insurance for 9 months. HTH, and thanks for reading the blogs!~ Amelia

3. Posted by: Rob

   Ridiculous.

4. Posted by: Amelia

   Hi again, Rob! Is it the COBRA subsidy in general that you object to, or just signing up for it?~ Amelia

5. Posted by: Arleen

   Hi,

   My 9 mos of reducted premium on Cobra ends 02-28-10

   I was wondering if there was any chance that the reduction rate would get extended past 9 mos.

   In March 2010 Cobra will be $459.96 mo.
   I will not be able to continue my Cobra.

6. Posted by: Amelia

   Hi Arleen! We don’t have a crystal ball, but you may want to contact your representatives in the US House and Senate and tell them to vote for universal healthcare NOW.
   Many people’s COBRA subsidy has already been exhausted, and it has not been extended. So while we cannot predict the future, it doesn’t look good. However, Congress is scheduled to vote on a healthcare bill within the next two weeks. If the bill passes, you may very well have access to affordable healthcare through that program.
   Otherwise, if you are unemployed, you may qualify for Medicaid. Contact the health department in your state. HTH, and thanks for reading the blogs!~ Amelia

7. Posted by: cath

   Message
   I was on NJ FMLA 12 weeks - ended July 21 2009 - Notified that my position was given to someone else and Health benefits ended that day. I remained disabled at that time. I was informed that I was on LEAVE OF ABSCENCE. (voluntary) My employment would be terminated if I was unable to return to work in 14 weeks.
   I had spinal surgery,
   After 14 weeks, I was terminated. I remain disabled. Short term disabilty ended. No UI no Long term disability.
   I was dissapointed to be informed that this involuntary termination leaves me still ineligible for the subsidy..due to the first qualifing event in July 2009

   I feel that what happened to me = some kind of loophole.???
   This law was enacted to enable people to maintain their insurance between jobs and avoid the trap of preexisting conditions and to continue receiving health care as needed. I remain unable to return to work..
   .
   I continue to be confused by this whole mess -
   It is like some horrible joke - I fit the requirements BUT

   I was involuntarily terminated before 12/31/09.
   I am on COBRA

   Any suggestions
   TIA

8. Posted by: Amelia

   Hi cath! Unfortunately, you are one of millions of hardworking Americans who, through no fault of your own, is uninsured. This can happen to anyone in our society.

   No, there may be no loophole that covers your situation. The COBRA subsidy was enacted specifically to help people who lost their jobs due to the recent economic recession. That is not why you lost your job. Nevertheless, it appears that your involuntary termination did occur within the period of time covered by the subsidy. Call 866-444-3272 and talk to a COBRA benefits advisor. Be aware that even if you qualify for the COBRA subsidy, you will have health insurance only for 9 to 18 months.

   Without getting overly political, Congress is currently debating a bill that would provide healthcare to all Americans — including those in your situation. You might want to contact your representitives in the House and Senate to let them know how much you need that coverage. You might also consider voting for a candidate who supports healthcare for everyone, in the next election. HTH, and thanks for reading the blogs!~ Amelia

   Read more about this at: http://www.dol.gov/ebsa/COBRA/main.html

9. Posted by: cath

   Amelia
   Thank you for your response.
   I thought I fit the bill - involuntary termination within the specified time period. My employer says no - related to my initial determination prior to my termination. I believe that my employer used a loophole to keep me from receiving this subsidy.
   I am appealing.
   I have done a tremendous amount of internet researching and as I said It seems like a cruel joke so tantilizing close but so out of reach.

   I have spent my ‘free time’ watching CSPAN I have made phone calls. I am not encouraged by the very nature of ‘our’ politicians and political system. Good ideas are often suberted or squashed by the reelection needs of politicians and our the ‘needs of our ruling class’

   I have also run afoul of my insurance company and am appealing their reimbursement policy.

   I will not be able to return to my job r/t my condition and need to redesign my job skills but fear I will be just short of the ‘requirements’ for help in that area.

   I am not on unemployment - not ready to work
   .
   No disability
   need to explore ssi
   The above systems are not coordinated and are not resources of advice but systems of NO as there may be millions of $$$ out there for retraining much time and money in in the UI and disability departments are spent building barriers to access.
   There are great big cracks in our system that can suck invisible people down.
   I need an advocate and spend some time looking for lawyersbut who or..
   Are there resources for people in my situation, on the precipice.
   TIA

   CATH

10. Posted by: Amelia

    Hi cath! All of your points are very well taken.

    You need to apply for SSI immediately. If SSI is awarded, it is retroactive to the first date you applied (not the first date you were disabled.) So every day you delay applying, is a day of benefits that you lose. Generally people who are physically unable to work for 5 months or longer qualify for SSI. You can apply now and provide the needed paperwork later. By doing so, if you are awarded benefits 3 months from now, your first check will be retroactive to the date you applied.

    For other social services in your area, dial 211 from any landline phone for a directory of benefits available in your city, county and state. (It doesn’t work from a cell phone.)

    Many community colleges offer lower tuition or even free tuition (or grants or awards) to people with low income or who have a disability. Some job-training programs funded through the federal government also offer free or lower cost training in certain fields, like healthcare or energy. Other job-training programs are coordinated through the state unemployment agencies, so it might be worth a visit to the local UI office, even though you do not currently qualify for benefits.

    You do need an advocate, and unfortunately, that is not something that our society provides. Lawyers need to be paid, so unless you are suing someone, the fee they charge generally offsets any financial benefit to you. (The hospital where you are treated may assign a social worker to you.)

    In some countries, society as a whole believes that they have an obligation to take care of people who are struggling by paying short and long term disability, pensions, welfare, etc. Unfortunately, the sad truth is that the U.S. as a whole does not feel that obligation to care for anyone who is sick, injured, aged, uneducated or struggling. There are relatively few programs in place to help the disadvantaged. And if you worked half of last year, you may not qualify for some of the programs that are available, because your income is too high. But hang in there — things will get better for you eventually. HTH, and thanks for reading the blogs!~ Amelia