Individual Health Insurance Cobra Subsidy Extended

Congress approved legislation over the weekend extending the federal subsidy of COBRA individual health insurance premiums and President Barack Obama signed it into law Monday afternoon.

The extension legislation provides for the following benefits:

  • Extends the premium subsidy eligibility period by two months, so it will end on February 28, 2010, rather than December 31, 2009.
  • Extends the period of the 65 percent COBRA subsidy from nine months to 15 months.
  • Establishes a transition period that applies to individuals who lost subsidies before the effective date of the Act because they received the maximum number of months of subsidies under the original subsidy provisions.
  • Establishes new notification requirements by group health plans or other entities.
  • Clarifies that eligibility and notice requirements for the subsidy are based on eligibility for COBRA due to loss of coverage because of qualifying event (involuntary termination of employment), both of which must occur during the eligibility period.
  • Becomes effective as if included in the original COBRA subsidy provisions of the American Recovery and Reinvestment Act (ARRA).

The action allows workers who have used up their original nine months eligibility to receive six more months of the 65 percent subsidy, and those who did not choose to continue with COBRA individual health insurance coverage once they timed out to rejoin the system, pay premiums retroactively and receive the subsidy and maintain COBRA continuation.  Workers who are involuntarily terminated through February 28, 2010, can now qualify to begin the subsidy and receive it for 15 months. (It also means that workers terminated after February 28, 2010, will not qualify unless Congress takes further action.)

These new changes in the premium subsidy program will also apply to those who are not eligible for COBRA individual health insurance, but instead are eligible only for state continuation coverage.

The original federal subsidy, included as part of the ARRA, provided a 65 percent premium subsidy starting in March to those who involuntarily lost a job in September 2008 or afterward, and was scheduled to be available only to workers who lost their jobs through the end of this year.

The unemployed who started receiving the subsidy when it was first available in March saw it lapse on December 1, and employees losing their jobs after December 31 were not eligible for the federal help without this Congressional action extending the benefits.

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