Ask a Lawyer
I Recently Lost My Job, But Need Health Insurance for My Family
Find Out If You're Eligible for COBRA
I recently lost my job and am struggling to maintain health insurance for my family and myself. I have heard that the recently passed stimulus plan might be able to assist me. How can I tell if I am eligible? And what are the benefits?
The American Recovery and Reinvestment Act (ARRA) provides a subsidy toward COBRA premiums for eligible individuals. If you are involuntarily terminated between Sept. 1, 2008 and Dec. 31, 2009, you may be eligible to pay only 35 percent of the actual COBRA premiums. The subsidy may also be used for CAL-COBRA, which applies to small employers (two through 19 employees).
You will not qualify for the premium reduction if you are eligible for other group health coverage or Medicare. You and your dependents will also be disqualified from the benefits of ARRA if you were terminated from your employment for a gross misconduct.
Employees who are terminated between now and the end of the year should receive a notice, likely with the COBRA or CAL-COBRA notice, of their rights under the ARRA and the procedure to claim the premium reduction. Employees involuntarily terminated from Sept. 1, 2008 to Feb. 16, 2009 should have received notices of their rights under ARRA by approximately April 20, 2009. The notices should include any necessary forms you will need to apply. You may also contact your former employer or the plan administrator for information about how to apply.
Note that even if you did not elect COBRA coverage when it was first offered, or you let it lapse (for example, those who dropped COBRA coverage because they were unable to continue paying the premium), you now have a new second election opportunity. This second election period does not extend the period of COBRA continuation coverage beyond the original maximum period (generally 18 months from the employee's involuntary termination).
Should you elect COBRA coverage under the ARRA, you will be responsible for payment of 35 percent of the premium on a monthly basis. The employer, plan administrator or insurer will cover the remaining portion of the premium and be reimbursed by the government through a payroll tax credit.
For more information about COBRA and premium reductions, visit the COBRA website.
Amy Semmel is an attorney with the firm of Donfeld, Kelley & Rollman. Her practice emphasizes employment, trade secret and business tort law. The information discussed here is a general explanation of the law, and is not intended to serve as legal advice. Readers requiring legal advice regarding a specific situation should consult an employment attorney.