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How the Stimulus Helps Laid-Off Workers
The legislation provides help with health-insurance bills and bigger unemployment benefits.
By Kimberly Lankford, Contributing Editor, Kiplinger's Personal Finance
February 16, 2009
I lost my job in January. How will the stimulus bill help me?
Several provisions in the stimulus bill aid recently unemployed workers.
Help with health-insurance bills. When you lose or leave your job, you can generally continue coverage through your employer's health-insurance plan for up to 18 months through a federal program called COBRA. You can't be rejected or charged more because of your health.
But the costs of COBRA coverage are very high. While employers usually pay about three-fourths of the premiums for their current employees, that subsidy disappears for laid-off workers -- leaving them with an average annual bill of $12,680 for family coverage, according to the Kaiser Family Foundation.
The stimulus provides a 65% subsidy to help cover the cost of COBRA for up to nine months. To qualify, a worker must be involuntarily terminated between September 1, 2008, and December 31, 2009. The subsidy ends if you find a job and your new employer offers health-care coverage or you become eligible for Medicare.
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What the Stimulus Means for You | ||
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Keeping Health Coverage After a Job Loss | ||
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What You Need to Know About Unemployment Benefits | ||
Workers who have lost their jobs since September 1, 2008, but didn't elect COBRA will be given 60 days to elect COBRA and receive the subsidy after being notified by their former employer that they are again eligible. To qualify, your income for the year must be less than $125,000 for individuals and $250,000 for families.
Keep in mind, however, that not all laid-off workers qualify for COBRA. The federal law requires only companies with 20 or more employees to offer COBRA benefits (some states have similar programs, or "mini COBRAs," for smaller companies), and COBRA is available only if an employer continues to offer health benefits to employees. If the employer discontinues its health-insurance plan entirely or goes out of business, there is no COBRA.
If COBRA coverage is not available, you may be able to get an individual health-insurance policy or, if you have health problems, you may be able to get coverage if your state has a high-risk pool or some type of continuation policy. See Keeping Coverage After a Job Loss for more information about your health-insurance options after a layoff.
Bigger and longer unemployment benefits. The stimulus bill also increases weekly unemployment benefits by $25 through 2009. The amount of your unemployment benefits continues to vary based on your previous income and your state, but everyone will receive an extra $25 per week. This increase is automatic -- people who are receiving benefits won’t need to take any special steps to boost their benefits. But it may take a few weeks for the state unemployment offices to reprogram their software programs and add the extra money, says Rich Hobbie, executive director of the National Association of State Workforce Agencies.
Plus, people collecting unemployment benefits get a tax break. Unemployment benefits are usually subject to federal income tax. But people receiving unemployment benefits in 2009 will be able to exclude the first $2,400. Any benefits you receive beyond that in 2009 will be subject to federal income tax.
The bill also extends the emergency unemployment-compensation program, which provides up to 33 weeks of extended unemployment benefits to workers who exhaust their regular benefits. Contact your state unemployment-benefits office for more information about receiving extended benefits (see the unemployment benefits map for links.
For more information about collecting unemployment benefits, see What You Need to Know About Unemployment Benefits.
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Reader Comments (3)
Posted by: frustrated at 05/29/2009 11:13:38 AM
Bigger and longer unemployment benefits and cobra? Give me a break. The cost of living is crazy. My husband lost his job in Nov. he can't find anything, his unemployment benefit is the max in FL at $275 per week. We have four kids and bought our first house in 2007. $275 per week??? Are you kidding me. His income was primary and I don't make enough to support six of us. Some help huh?
Posted by: Dear Frustrated at 06/11/2009 01:00:03 PM
Aweee...You had FOUR kids before you bought your first house? Then you bought a 4 bed/3bath 3500 sq foot home, with a two car garage to park the gas guzzling SUV in. At least you live in a nice place like Florida with a pool right? And now, having never prepared yourself for a downturn, you expect those of us that did to pay for your actions? Instead of being gratefull to have some help feeding your kids, you complain? Here's a news flash huny, when you get old & gray, if Social Security is still around, you won't be able to live on that either...
Posted by: BARBARA at 07/27/2009 08:08:22 PM
...MS. FRUSTRATED, WHAT PART OF RAISING FOUR KIDS DID YOU NOT UNDERSTAND, I AM 57 YEARS OLD AND I RAISED TWO KIDS, 13 YRS APART OF EACH OTHER...I WAS A SINGLE MOM, HUSBAND DIED ON THE FIRST ONE AND NO LIFE INSURANCE...THIS WAS 1975, NOT TODAY WHEN WE KNOW MORE, AND THEN 13 YRS LATER A SECOND CHILD WHEN I DECIDED NOT TO MARRY THE DAD AND NO I DID NOT WANT OR NEED HIS MONEY, I WORKED FOR MY COLLEGE EDUCATION MYSELF NO ONE GAVE ME THE MONEY...I WOULD OF LOVED TO HAVE HAD A LOT MORE KIDS, ..IF YOU WOULD OF ONLY HAD SAY TWO KIDS, ALL THAT EXTRA MONEY COULD HAVE BEEN PUT INTO A BANK ACCOUNT AND COULD OF BEEN USED TO GET YOU THROUGH THE BAD TIMES, JUST LIKE WITH ME...GO WORK AT THREE JOBS (LIKE I DID) AND...GO GET IT YOURSELF...