Monthly Archives: February 2009

COBRA and the Stimulus Bill – 2009

Q. Does the Economic Stimulus have anything to help me with Health Insurance costs?

If you were laid of since September 1, 2008, or in 2009, the answer is Yes.

The House of Representatives on a 246-183 vote Friday gave final approval to a massive economic stimulus bill that would provide a 65% federal COBRA premium subsidy for nine months for employees who are laid off between Sept. 1, 2008, and Dec. 31, 2009.

The legislation, among other things, would require employers to locate employees laid off since Sept. 1, 2008, who declined COBRA to tell them they have a new right to opt for the coverage with the government picking up 65% of the premium. Seems easy, but there are complications. The subsidy is financed to the employer through a reduction of employer taxes on wages. The employer must then pass that savings on to you.

Individuals would have 60 days after receiving the notification to sign up for the coverage. The subsidy would apply to COBRA premiums starting March 1. The subsidy, though, would not be available to individuals with annual adjusted gross incomes exceeding $125,000 or couples with incomes over $250,000.

The Senate has approved the legislation, H.R. 1, and awaits the President Obama’s signature.

Not only does this not help small business, but in the long run, it doesn’t really help laid off employees from big business. If you delay getting private insurance, at a lower cost now, because you are enticed into the subsidized COBRA, you might not have the opportunity to purchase insurance, 9 months out. A pregnancy, knee injury, counseling, or medication might make you ineligible down the road. This is a bill that benefits insurance companies, drug companies, and hospitals. If the money was given to you as a voucher, you could decide to purchase the most cost effective option for your family.

(This law will not apply to companies that have less than 20 employees and are not subject to COBRA)