Ask Kim
Take Advantage of the Extended COBRA Subsidy
The government will continue a little longer to help people who've lost jobs pay for health coverage.
By Kimberly Lankford, Contributing Editor, Kiplinger's Personal Finance
January 4, 2010
I lost my job last year and have been receiving the 65% subsidy to pay my COBRA health-insurance premiums. Is the subsidy going to be extended beyond nine months?
There’s good news for people who lose their jobs -- Congress did extend the COBRA subsidy in late December.
Last year’s economic-stimulus plan originally provided a government subsidy to help people who lost their jobs between September 1, 2008, and December 31, 2009, paying 65% of their COBRA health-insurance premiums for up to nine months. But that nine months ended in November for people who started receiving the subsidy right after the stimulus law was passed last February. People were also concerned that they might not get the subsidy at all if they lost their jobs after December 31.
The law was amended in late December to extend the COBRA subsidy from nine months to 15 months. And it now applies to people who became unemployed between September 1, 2008, and February 28, 2010.
If you were receiving the subsidy, you don’t need to do anything else to get the extra coverage. You’ll just continue to pay 35% of the COBRA premiums, and your former employer will be reimbursed by the government for the remaining 65%.
If your nine months of COBRA subsidy expired before the extension was passed, however, you could get some money back. If you paid 100% of COBRA premiums in December, for example, the Department of Labor recommends that you contact your plan administrator or former employer to request a credit for future months of coverage or a reimbursement for the overpayment. And if you had dropped COBRA after the subsidy expired, you’ll be given some extra time to pay the missed premiums and retain your coverage. You must pay your 35% share of the COBRA premiums by February 17, 2010, or 30 days after receiving a notice of the extension from your plan administrator (whichever is later) to keep the coverage. For more information about the COBRA subsidy and your rights, see the Department of Labor’s COBRA Continuation page.
You still cannot receive the subsidy if you are eligible for other group health coverage (such as a spouse’s plan) or Medicare. And, as before, you can qualify for the subsidy only if your income for the year is less than $125,000 if you are single or $250,000 if you’re married filing jointly (the subsidy phases out entirely once your income reaches $145,000 for single filers or $290,000 for joint filers).
The rest of the COBRA rules remain the same. In most cases, only companies with 20 or more employees are required to let former employees continue on their group health-insurance plans through COBRA (although some states have similar requirements for smaller companies). After the 15-month COBRA subsidy expires, you’ll have to pay 100% of the premiums yourself, plus an administrative charge of up to 2%. COBRA coverage generally lasts for only 18 months after you lose your job, although it can end earlier if your employer goes bankrupt or discontinues its health-insurance plan for current employees. But those rules may change if the health-care-reform law is signed. The House bill would extend COBRA eligibility beyond 18 months until 2013.
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Reader Comments (21)
Posted by: frank blazer at 01/05/2010 01:41:54 PM
Just wondering I retired February 09 bought Cobra through previous employer.Was not eligible for 65 percent refund from government since retired instead of losing my job.Private insurance policy was higher than what I could buy Cobra.My 18 months on Cobra will be up July of 2010.Will the new House Bill extend my eligibilty till I am 65 and can get on Medicare
Posted by: Oscar M Graham at 01/05/2010 06:51:10 PM
My Cobra started last October 2008; making me eligible for 18 months ending at the end of March 2010. My question is, will the normal the normal 18 month for Cobra eligibility be extended? Thanks for any information you may be able to share.
Posted by: Ewa at 01/05/2010 09:17:16 PM
Do you think that Feb 28,2010 will be extended to a later date?
Posted by: Carol at 01/06/2010 11:14:54 AM
I was laid off in April 2009- I have been on COBRA and the first 9 months were reduced to 35% and employer paid 65% - In January 2010, I started paying the full amount- Am i reading this right that I should still be paying 35% for up to 15 months-Shouldn't my former employer have notified me-Need your help. Thank you
Posted by: Kim Lankford at 01/07/2010 06:22:15 AM
Hi Carol, this is Kim Lankford. Many people who started receiving the COBRA subsidy when it was first introduced ended up paying the full premiums for a month or so before the COBRA subsidy was extended. The extension applies retroactively, however, and your former employer or health-plan administrator should reimburse you for the overpayment or give you a credit for future months' of coverage. The law was amended on December 19, so plan administrators are in the process of notifying participants of the change right now. I recommend contacting the administrator right away to ask about getting a reimbursement or credit. If you have any trouble getting back the extra money, contact the Department of Labor's Employee Benefits Security Administation -- you can reach an EBSA benefits advisor at (866) 444-3272. Hope this helps.
Posted by: GQinAZ at 01/20/2010 09:28:57 PM
I just got my letter in the mail today (Jan 20) from my COBRA plan administrator. My letter made it clear that prior overpayments are being tracked as credit balances on account, that affected consumers within the new 15 month period should pay the 35% rate, and that in some cases new payment vouchers will be sent out. Probably depends on the vendor. A prudent person will keep their own ledger, know their balance, and try not to overpay. Getting refunds out of some companies can be like pulling alligator teeth. ;-)
Posted by: Paula Springs at 02/24/2010 02:14:56 PM
I turned 62 Jan 1, 2010. I get Cobra until March 1, 2011 through the company my husband retired from. I have major prior health conditions,and will not be able to find other insurance after that. I will be uninsured un til I am 65 and qualify for Medicare. Is there any way I can continue the Cobra until I am 65? Thank you.
Posted by: John O'Riordan at 03/03/2010 12:23:25 PM
My situation is identical to Oscar Graham's question of January 5th, which I don't see you were able to answer to date on the Reader Comments. If you could help, I would appreciate it. I went on COBRA benefits effective October 2008 and have participated in the COBRA subsidy since it was initiated effective March 2009. While the December legislation extended the COBRA subsidy to 15 months, my employer is saying I am not eligible for the 15 months, but am only entitled to 13 months (Mar'09-Mar'10) subsidy whereas the 15 month subsidy would run thru end May 2010. This conflicts with the Dec legislation, which states "the 15 month subsidy applies to people who became unemployed after September 1,2008. Can you clarify this. I called the Dept of Labor and could not get a straight answer from an informed person and a promised return call from DOL was never received. The COBRA administrator at my previous employer (with no real conviction she is correct) is telling me that since my COBRA eligibility of 18 months ends in March 2010 (Oct' 08 thru Mar '10), I am not eligible for the full 15 months. Can you clarify? Many thanks in advance.
Posted by: Kim Lankford at 03/04/2010 08:00:26 AM
Hi Oscar and John, this is columnist Kim Lankford. Thanks very much for asking your question about the time period for receiving the subsidy. Even though the subsidy can last for up to 15 months, people who lose their jobs can only receive COBRA health insurance benefits for up to 18 months -- so if you lost your job several months before the COBRA subsidy took effect, then your COBRA eligibility will end before you've received the subsidy for a full 15 months. The Department of Labor has a helpful fact sheet that explains the rules in more detail (www.dol.gov/ebsa/newsroom/fscobrapremiumreduction.html). Under the Period of Coverage section it says: "The premium reduction [COBRA subsidy] for an individual ends upon eligibility for other group coverage (or Medicare), after 15 months of the reduction, or when the maximum period of COBRA coverage ends, whichever occurs first." I'm sorry to be the bearer of bad news, and I know that many other people will be in a similar situation as you are over the upcoming months. I wrote an article "Score Big Savings on Health Coverage" several months ago that includes advice for people who are searching for coverage on their own, including people whose COBRA coverage has expired: www.kiplinger.com/magazine/archives/2009/08/save-money-on-health-coverage.html. I hope that some of the information in the article can help you with your search. Thanks again for writing to us. Hope this helps.
Posted by: Patricia at 03/11/2010 04:28:29 PM
Hi Kim, I have been a fan of Kiplingers for years! Like John and Oscar I was eligible for COBRA in October of 2008 but didn't elect coverage until March 2009 when the subsidy became available. I was under the impression until now that the 18 months of COBRA coverage began in March of 2009. I think many American are under the same erroneous impression!!! Please, please let your readers know, so many of us think the 18 months began in March 2009! There are many Americans who like me lost our jobs in September 2008. We are in for an unexpected hardship.
Posted by: mari at 03/13/2010 03:55:03 PM
Help, I am on medical from my job. I lost my medical insurance. the Health insurance people said they will contact me but didn't give me a response to how long it will be considering I am still going to doctor and racking up bills and soon I won't be able to go, because I dont know what my cobrba payment is going to be. please someone talk to me I need help...I don't know if these people have a time limit to offer this benefit, because the woun't tell me any thing...
Posted by: Elaine S Ray at 03/22/2010 07:26:57 PM
I was laid off Jan. 15, 2009. I have received the cobra benefits twice. The last one ended 11-30-09. I paid the full prem for Dec and Jan. and I am back on it. I believe it ends May 2010. Is this going to be extended for me...?
Posted by: pdbean at 04/15/2010 01:38:01 PM
Is (it) likely that the reduced cobra benefits will be extended past the current 15 month maximum?
Posted by: Harry Johnson at 04/26/2010 04:07:33 PM
Trying to figure out what's going on with extending Cobra (even if people don't get subsidized. I kept hearing about extending Cobra to 24 months and for a while I was given the impression the bill was going to be passed any day. Now it looks like someone dropped the ball. What's your impression? I know there's a lot of people whose Cobra just ran out and every month the number will get larger. If nothing is done my wife and I will be without insurance June 15th! No one wants us because of out pre-existing conditions. Would apprecaite what your thoughts are. Regards, Harry Johnson
Posted by: Kim W at 05/12/2010 05:15:13 AM
I, Like Harry Johnso, am scrambling to find out if there is any way to receive my COBRA insurance past the 18 month eligibility period if you are not disabled. Is there any pending legislation addressing this? My husband and I both have numerous pre-existing conditions, which we can have covered in a private HIPPA guarnateed coverage policy for about $1800/month, which is more than out current monthly income. We have both been paying intop the system and working since 1979. I talked to a TN state socail worker today and my children do qualify for Medicaid but I don't since I live with the children's father, my husband-if they were illegitimate or we were divorced, I could get Medicaid/TennCare.
Posted by: Cobra Subsidy Needed at 05/19/2010 05:22:09 PM
My position, along with 10 other team members positions, are being eliminated...The company is outsourcing our entire department. Do you believe the Cobra Subsidy will be extended past 5/31/10? Losing your position through no fault of your own is devastating enough. I feel all employers who displace their workers should be responsible for Cobra Subsidy
Posted by: Ben Weinstock at 06/05/2010 08:43:16 AM
I lost my job last March 1, 2009, but was paid through April 2009. My former employer has been paying the 65% of COBRA and I have been paying the 35%. Today I received an email from my previous employer stating that the COBRA is up in June, and I need to start paying the full amount. IF I am correct 15 months would take me through the month of July. My question is also, was COBRA extended to 18 months? Thank You
Posted by: Bev Hall at 06/15/2010 03:47:09 PM
I am 57 and lost my Job Feb 09 and have paid my Cobra currently I am paying 1,093 to keep my Cobra. The 65 percent is no longer in effect and my Cobra will stop the end of August 2010. I have pre-existing health problems and am unable to affored/find insurance. Is there a bill to help people 55 or older that will keep Cobra in effect with the 65 percent refund until I am able to get on Medicare.
Posted by: Harry Johnson at 06/24/2010 07:24:40 PM
Well Kim, As I've been mentioning my cobra expired June 15th and now I'll be paying full price for my prescriptions which I can't afford comes out close to 2000.00 a month. So what does one do. Self medicate. Basically decide which meds are more important then the others not to mention the importance of food, gas & electric, insurance and other incudentals on an income of 2300.00 my wife and I enjoy. Any solutions. Don't bother suggesting state help. My wife and I have lived in our home for 28 years so thankfully we have a place to live. Since we own it outright we're not considered destitute. Whe they couldn't pass the 6 month extension Democrat Sestak proposed in Oct 09 is beyond me but they don't care. We're to busy with oil spills and illegals to worry about the americans who are out of work and out of insurance. Wonder how many have died because they couldn't afford their meds and food. The number will only go up every month.
Posted by: Steve at 07/22/2010 12:07:17 PM
Hi Kim, I am on SS Disability (not receiving Medicare at this point, but will be in Jan. 2011.) I have been paying 100% of my Cobra coverage for 2 months and it runs out at the end of August. With the extension of the unemployment, will the Cobra coverage be extended beyond 15 months and will it be on the 35 - 65% level again? If so, what do I need to do? I do have pre-existing problems and its a problem finding new coverage. Thanks, Steve
Posted by: linda lopez at 07/25/2010 08:32:14 PM
i lost my job in sept. 2009. I have been paying the cobra subsidy since then. hopefully by the time my 15 months are up i will have another job that offers health insurance. however, if i do not, will i be able to continue to pay just the 35% that I am currently paying? without work how are we expected to pay more?