COBRA Coverage for Unemployed Workers – Cost and Coverage

Health Insurance While You’re Unemployed

COBRA Benefits and COBRA Subsidy

Among the list of worries you have when you’ve been laid-off is how you will maintain your health insurance coverage. The very term COBRA strikes fear in the heart of any suddenly unemployed worker. You imagine hundreds of dollars each month being sucked out of your dwindling checking account just to keep basic medical coverage for you and for your family.

• How much does COBRA cost?
• Can I get information on the COBRA subsidy for unemployed workers?
• How long does COBRA coverage last while I’m looking for an affordable health insurance plan?

COBRA Coverage

COBRA is temporary extension of your employer’s group healthcare benefits in the event you are laid-off or separated from your job. When your employer’s healthcare coverage ends you may then elect to begin COBRA coverage under the same provider. Difference is, you pay all of the premium.

Your company’s plan administrator will set-up the benefits program for you. Good news is you do have what’s called an “election period” during which you may weigh the pros and cons to COBRA coverage, even change your mind one way or the other about it. The length of election period varies depending upon how quickly your plan administrator notifies the healthcare provider, etc., but you could have a couple months in which to decide if you can afford COBRA coverage.

COBRA benefits typically extend your healthcare coverage for up to 18 months following cessation of your job benefits.

Are you eligible for COBRA benefits?

If you’ve been laid off from a job where your employer has covered you under a group health plan for 20 or more employees you are likely eligible to elect COBRA coverage for yourself, your spouse and/or dependent children.

What if you worked for a small business with less than 20 employees on a group healthcare plan? Are you unqualified for COBRA? Not if your state has created its own Mini-COBRA clause. Find out more about the State Mini-COBRAs or continuation of coverage programs that ensure everyone is eligible to elect extended healthcare coverage.

COBRA Cost

When you elect to continue COBRA insurance coverage you assume the full cost of the monthly premium. You are also responsible for an initial retroactive premium payment—you owe the amount past due on any outstanding coverage since your regular benefits ended, or that paid by your former employer. That can be a big wallop to your pocketbook.

COBRA is a temporary, but expensive, fix. There are other lower cost healthcare insurance options.

Recent COBRA Subsidy for Unemployed Workers

Part of President Obama’s recent aggressive strategy to provide relief to the throngs of laid-off American workers was the American Recovery and Reinvestment Act. Part of this Act has included a COBRA subsidy for eligible benefits members.

• How do you qualify for the COBRA subsidy from the government?
• Will it help make COBRA an affordable option?

Under the new COBRA subsidy, the federal government will cover 65% of your COBRA premiums under the following conditions:

• You are laid off from work between September 1, 2008 and December 31, 2009
• Were covered by your employer’s group coverage when separated from your job.
• You elect to continue COBRA coverage and pay the monthly premiums.

For more detailed information you should contact your healthcare plan administrator.

Recommended Resources:

U.S. Department of Labor COBRA Continuation Program

U.S. Department of Labor COBRA Continuation Act under the American Recovery and Reinvestment Act of 2009