Government offers discount on COBRA

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NEW YORK --- The good news: The government is offering a big discount on health insurance for laid-off workers.

The bad news: Figuring out whether you're eligible can be confusing, especially if you work for a small business. And there are some tricky deadlines to consider.

Traditionally, most people who leave their jobs can stay on their former employer's health plan through COBRA, the Consolidated Omnibus Budget Reconciliation Act of 1985. The idea is to give people access to health insurance while they're in between jobs.

The law only applies to people who worked at companies with 20 or more workers, but many states have their own laws to give workers at small businesses limited COBRA coverage as well.

Either way, the cost of COBRA is often prohibitive because employers no longer pay a portion of your health care premium. But the new government program can help -- it covers 65 percent of the premium cost for COBRA for as long as nine months.

The program also offers many workers a second 60-day window to sign up for COBRA if they missed the original deadline. People laid off from small businesses might not get a second chance to enroll, depending on where they live.

Employers must send notices to workers eligible for a second chance at COBRA by today, so check your mail. And once again, the new sign-up period ends 60 days after you're notified.

Here are some questions and answers offering more details about the COBRA subsidy.

Q: I work at a business with fewer than 20 workers. Am I eligible for the COBRA discount?

A: You might be if your state has a "mini-COBRA" law. It works the same way as traditional COBRA, but usually for a shorter period of time.

Some states with mini-COBRA laws recently extended their coverage periods to allow workers to take advantage of the full nine months of subsidies being offered.

They are Georgia, Ohio, Utah and Virginia, along with the District of Columbia, according to Families USA, a health care advocacy group.

Q: My state has a mini-COBRA law, but I missed the 60-day deadline to sign up. Do I also get a second chance?

A: The states giving laid-off workers a second chance are: Georgia, Kansas, Kentucky, Maryland, New Hampshire, New Jersey, New York, Rhode Island, South Dakota, Utah, Virginia and West Virginia, according to Families USA.

Q: If I take advantage of the second election period, do I have to pay for retroactive coverage?

A: Your plan can require you to pay for retroactive coverage starting Feb. 17, which is when the federal subsidy became available. So if you were laid off in September and are signing up for COBRA for the first time, you could be responsible for premium payments (minus the subsidy) starting Feb. 17 or March 1, because most plans require payments on a monthly basis.

Remember, the total coverage period under COBRA doesn't change. So if you were laid off in September, you can only get COBRA for 18 months after that date. And again, the 65 percent subsidy covers up to nine months.

Q: How do I sign up for the COBRA subsidy?

A: Your plan should send you materials notifying you of your eligibility, along with the proper forms to sign up for the subsidy.

If you think you qualify for the discount but haven't yet received any materials, don't hesitate to call your health plan provider.

Q: In what circumstances am I not eligible for the subsidy?

A: You don't qualify if you quit your job or were fired for misconduct.

If you earned $145,000 or more for the year, you have to pay back the entire subsidy in taxes. Those who earned between $125,000 and $145,000 must pay back part of the subsidy.


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