Monday, February 23, 2009

Stimulus Bill Expands COBRA Coverage

The new Stimulus Bill signed into law by President Obama includes an unprecedented expansion for COBRA, the federal statute that provides workers and their families with access to 18 months of health benefits from their previous employer.

To this point, the former employee had to pay for his or her portion of what the employer once paid on their behalf. The new legislation lends a hand to the former employee, funding up to 65% of the COBRA premium for those who became eligible for COBRA coverage between Sept. 1, 2008 and Dec. 31, 2009. The legislation also gives the recently unemployed a second chance to enroll in COBRA coverage.

An online article in the The City Wire ( does a nice job of breaking down the details of the plan:

Employee Eligibility

Individuals who have been involuntarily terminated between September 1, 2008 and December 31, 2009 with annual incomes less than $125,000 (single) or $250,000 (couples) are eligible for the COBRA premium assistance, along with their family. Qualified individuals, who initially decline COBRA coverage, would be given an additional 60 days after they receive notice of the special election period to elect to receive the subsidy. The election period begins on the date of enactment of the ARRA.

Special Enrollment

The bill allows group health plans to provide a special enrollment right to allow eligible individuals to elect different coverage under the plan in electing COBRA continuation coverage.

Notice Requirements

COBRA notices must include information on the availability of the premium assistance. Model notices from the Department of Labor are due 30 days after enactment.

Effective Date

These provisions are effective for premiums the first calendar month following the date of enactment.