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Signing-up for the subsidy and subsidy eligibility

  1. Question: How do I receive the subsidy for COBRA?
    • Answer: The first thing you need to do is be sure you qualify (see eHealth's COBRA Learning Center FAQ).The subsidy for COBRA will be administered through your former employer or benefits administrator. Make sure your employer has your most recent contact information so they can contact you once they're ready to administer the subsidy.
    • If you qualify for your spouse's plan, another group healthcare plan or Medicare, you're not eligible for the subsidy. If you fail to notify your COBRA plan administrator, you may face tax penalties.
  2. Question: If I don't qualify for the subsidy what can I do?
    • Private health insurance: Those in relatively good health often find less expensive options to COBRA ?even with a 65% subsidy - in the private health insurance market. A 2008 survey of 227,000 eHealthInsurance customers showed that half of all individual policy holders paid less than $130 per month1 and over half of family policy holders paid less than $300 per month1.
    • Explore public programs: If none of these options are viable for you, the Foundation for Health Coverage Education (FHCE) has an excellent web site and their U.S. Uninsured Help Line that can connect you with publicly-funded programs in your state. Their web site is www.coverageforall.org and their toll-free number is 800-234-1317.
  3. Question: When will my employer let me know if I'm eligible or ask me to sign up?
    • Answer: As of February 17, 2009, your employer has 60 days to notify you of your eligibility, which means you should receive notice by April 18, 2009.
  4. Question: If I want the subsidy, but am not currently enrolled in COBRA, does that matter?
    • Answer: No, you don't have to be enrolled in COBRA currently to qualify for the subsidy. If you're eligible for the subsidy and lost your job on or after September 1, 2008 through February 16, 2009;
      • You'll be eligible for a Special COBRA Election Opportunity: you will have 60 days from the date that your employer notifies you of the opportunity to re-enroll in COBRA.
    • Answer: If you lost your job on or after February 17, 2009:
      • You simply need to sign up for COBRA.
      • If you were offered COBRA, and declined, but now want to accept COBRA due to the subsidy, be sure to contact your previous employer to let them know before the end of your 60-day election period.
  5. Question: Does the subsidy in the American Recovery and Reinvestment Act (ARRA) of 2009 apply to my state's COBRA extension program, which requires employers with fewer than 20 employees to provide benefits through COBRA?
    • Answer: It depends on each state and its COBRA extension program:
      • Although COBRA does not apply to companies with fewer than 20 employees, many states have programs that extend COBRA benefits to those who work for companies with fewer than 20 employees.
      • It ultimately depends on the state you're in. Go to www.coverageforall.org or your state insurance commission for more details.
  6. Question: If I was fired, does that make a difference?
    • Answer: The subsidy is available to employees whose employment was involuntarily terminated (for reasons other than gross misconduct) and who are not eligible for health insurance coverage through other group health coverage, such as their spouse's plan or through Medicare. So if you were fired, then you may qualify for the subsidy.
  7. Question: When does the clock start for my 9-months of subsidized COBRA?
    • Answer: For anyone who is eligible for the subsidy, and who lost their job between September 1, 2008 and February 16, 2009, your eligibility starts on March 1, 2009.
      • If you lose your job after February 16, 2009, your eligibility for the subsidy begins in the same month that you become eligible for COBRA.
      • Anyone who loses their job after December 31, 2009 will not be eligible for the subsidy.
  8. Question: If I voluntarily left my job, or was asked to resign and did so, do I qualify for the COBRA subsidy?
    • Answer: No. The subsidy is only available for those who meet all of the other enrollment criteria and lost their jobs involuntarily. Unfortunately, a resignation ?even if it was requested and recognized by your former employer as a voluntary resignation - qualifies as a voluntary termination.
  9. Question: How does this subsidy apply to me if my former employer is already paying for a percentage of my COBRA premiums?
    • Answer: The subsidy for COBRA applies to 65% of what you're currently paying out of pocket for COBRA premiums.
      • Assume your monthly COBRA premium is $500 and your employer was paying $250 of that cost for you.
      • The 65% subsidy applies to your remaining out-of-pocket expenses; in this case, the $250 you're still paying for on your own.
      • In this scenario, your employer would pick-up an additional 65% of the $250 ($162.502) and you would have to pay the remaining 35% ($87.502)
  10. Question: I worked for a non-profit organization and lost my job. Am I still eligible? If my former employer doesn't pay taxes, how will they get reimbursed for my COBRA premiums?
    • Answer: Assuming you meet the other qualifications, you will get the subsidy, even if you were working fora non-profit.
      • Thesubsidy for COBRA isbeing financed by employers who are, in-turn receiving a pay-roll tax credit for the expense. Any company with employees on a pay-roll pays these taxes ?including non-profits.
      • Every employer that pays the 65% subsidy for COBRA premiums will get to deduct the cost of these subsidies from their pay-roll tax contributions.
  11. Question: I was out on disability for nine months, and my employer finally terminated me in February. Am eligible for the subsidy?
    • Answer: Yes, you qualify for the subsidy so long as you were involuntarily terminated (for reasons other than gross misconduct) and you're not eligible for health insurance coverage through your spouse's plan, or through Medicare.
  12. Question: I've lost my job and have also recently been divorced. My ex is still covered on my group plan through COBRA. Do they qualify for this subsidy?
    • Answer: Yes, as long as they qualify for COBRA under your group plan, and are not eligible for another group plan or Medicare.
  13. Question: My children have aged off of my COBRA plan and are now uninsured. Can I put them back on my group plan and get the subsidy?
    • Answer: No, dependents terminating coverage due to surpassing a policy's age limit will not qualify for the subsidy.  
  14. Questions:  My hours were cut back from full-time to part-time and I lost my group coverage. Do I qualify for a subsidy?
    • Answer: No. You're eligible for COBRA, but not for the COBRA subsidy because you have not been terminated involuntarily.

 

Footnotes:
1SOURCE: eHealth, Inc.'s 2008 report: Cost and Benefits of Individual and Family Health Insurance Plans: http://www.ehealthinsurance.com/content/expertcenterNew/eHealthCBreport2008FINAL.pdf
2 Calculated using eHealth's COBRA calculator located at www.COBRALearning.com