labor lawAdivision of labor law center

In late-breaking news, on December 16, 2009  Congress passed a law to extend both the COBRA subsidy implemented under the stimulus package in February 2009, and unemployment benefits to millions of Americans. 

 

Still, many workers who were eligible for the subsidy at its inception have already lost coverage – they exhausted available benefits on December 1, 2009. Regardless of the date of termination, the COBRA premium reduction is available for a maximum of 9 months.

 

Employees terminated on or before December 31, 2009 will qualify for the original COBRA subsidy. The subsidy allows workers to continue their current health insurance coverage while paying just 35% of the COBRA premium. The balance of the COBRA premium is paid by the employer, who takes a credit on the quarterly payroll taxes, passing the cost along to the federal government.

 

Actually, until President Obama signs the extension into law, an employee terminated in late December 2009 might not qualify for the COBRA subsidy, if his or her group insurance coverage continues until January 1, 2010.

 

Any employer who is considering laying employees off in early January might actually be doing the workers a favor by terminating them prior to December 31, 2009 unless the extension goes into effect ASAP.

 

In order to qualify for the COBRA subsidy, the worker must lose his or her job through no fault of their own. Employees who voluntarily resign, or who are fired for misconduct, do not qualify for the COBRA subsidy. Those who resign voluntarily may still qualify for COBRA coverage at full cost.

 

According to a study by SHRM, the Society for Human Resource Management, the average cost of COBRA coverage is $640 per month for a single employee, and $1,100 per month for family coverage.

 

The COBRA subsidy began in February 2009 for workers laid off after September 1, 2008 and December 31, 2009. Workers who had already been terminated were given the opportunity to re-enroll in COBRA. The subsidy lasts for 9 months, meaning coverage ended on December 1, 2009 for the employees who signed up for coverage beginning March 1, 2009.

 

 

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