Sunday, December 27, 2009

Understanding COBRA and "Mini-COBRA"

The American Recovery and Reinvestment Act (the economic stimulus legislation) provides assistance with premiums to help involuntarily unemployed workers purchase their former employer's COBRA or other continuation coverage. Originally, the act provided nine months of premium assistance for people laid off between September 1, 2008, and December 31, 2009. However, emergency legislation that President Obama signed into law on December 19, 2009, has extended this assistance: People can now get assistance paying for their COBRA premiums for up to 15 months if they were laid off between September 1, 2008, and February 28, 2010. Furthermore, in 2010, Congress may consider passing legislation that assists people who are laid off later than February as part of the anticipated jobs bill.

Currently, under the act and its extension, for up to 15 months, eligible unemployed workers will need to pay only 35 percent of their total COBRA premiums to continue the health coverage that they had through their jobs, and the federal government will reimburse employers or health plans for the remaining 65 percent of premiums. People are eligible for premium assistance if they were (or are) laid off between September 1, 2008, and February 28, 2010; have annual income during the tax year that does not exceed $145,000 for individuals and $290,000 for families; have a right to continued health coverage under COBRA or another law; and are not eligible for coverage under another group plan (such as through a spouse’s employer) or for Medicare. People with adjusted gross incomes between $125,000 and $145,000 (or between $250,000 and $290,000 for joint filers) will need to repay a portion of the assistance that they receive, while people with incomes below $125,000 for single filers and below $250,000 for joint filers are eligible for full assistance with no repayment.

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