COBRA insurance is temporary health care insurance for people who have just lost their job and their health insurance coverage. It is also used by recent retirees and commonly covers spouses and children as well. Typically it is used by workers who are between jobs that provide health care and is provided by the previous employer’s medical plan.
Previously, the unemployed person had to pay 100% of the COBRA insurance premium in order to be covered which can be quite expensive.
65% subsidy to COBRA insurance costs
In the new 2009 economic stimulus package – the government will cover 65% of the COBRA premiums for 9 months – given that these costs can be $1,000 per month for a family – this is a significant saving for someone who has just lost their job.
Who is eligible for this?
- Was laid off between Sept 1, 2008 and before Dec 31, 2009.
- Income is less than $125,000 for single personal and $250,000 for couples.
Longer window to apply for COBRA
Another change is that workers who were laid off after September 1, 2008 have another 60 days added to the window where they can apply for COBRA. This is on top of the traditional 62 day window.
Did you know?
COBRA is short for Consolidated Omnibus Budget Reconciliation Act. This act was passed in 1986.