Travelers eligible for COBRA subsidy 

The final stimulus bill includes a 65% subsidy of your COBRA bill for up to 9 months. The subsidy starts effective February 17, 2009. To be eligible, you would have had to have ended your contract with health insurance and not currently be eligible for group health through a new employer. In addition, if you ended a contract with group health insurance and declined COBRA coverage, the bill gives you a second chance retroactive to Sept 1, 2008 to activate COBRA. Of course, you would have to make good on premiums from time of your involuntary termination (which includes normal contract ending dates) to the present and only premiums after February 17 will be subsidized.

This is great news for travelers having difficulty landing a new assignment, or travelers under contract with agencies who do not offer group health insurance (you are not eligible for a subsidy if you are working for an employer with group health although you can continue to COBRA your prior insurance).

The process is to contact your former employer. If you are eligible, your new COBRA payments would drop to 35% of the full amount. Your former employer will be reimbursed on their federal quarterly tax return (Form 941) for the remaining 65%. This is a recent enough law that many employers will not be up to speed yet so it may take a bit of extra time.

There are some transition rules that allow employers to charge full premiums for March and April and the insurance company to reimburse the excess to the eligible covered later. Model notices and rules are expected to be provided around the middle of March by the federal Dept of Labor specifying the time by which employers must give notice of the federal premium assistance.

Here is the official government statement from the Dept of Labor:

The American Recovery and Reinvestment Act of 2009 (ARRA) provides for a 65% reduction in COBRA premiums for certain assistance eligible individuals for up to 9 months. An assistance eligible individual is a COBRA “qualified beneficiary” who meets all of the following requirements: 

  • Is eligible for COBRA continuation coverage at any time during the period beginning September 1, 2008 and originally ending December 31, 2009 has now been extended through May 31, 2010;
  • Elects COBRA coverage (when first offered or during the additional election period), and
  • Has a qualifying event for COBRA coverage that is the employee’s involuntary termination during the period beginning September 1, 2008 and ending December 31, 2009.

What other agencies will provide information about the COBRA subsidy?

Information about the COBRA subsidy will also be available through the Department of Labor and the Department of Health and Human Services, which, along with the IRS, share responsibility for the COBRA requirements.

Visit the Department of Labor Web site here for information related to COBRA eligibility and the subsidy. Benefits Advisors are also available to assist you at 1-866-444-3272.

Visit the IRS COBRA Health Insurance Continuation Premium Subsidy here.

Visit the IRS to find Information Related to Tax Provisions in the American Recovery and Reinvestment Act of 2009 here.

Visit the House Committee on Education and Labor fact sheet here.

Some states Insurance continuation acts modify the COBRA subsidy, eligibility, and times. Contact your state insurance board for more information. State insurance boards may also provide significant help if your employer is not complying with federal or state insurance laws.