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Home Money Matters Insurance How to Reduce COBRA Health Insurance Payments by 65%

How to Reduce COBRA Health Insurance Payments by 65%

Wednesday, 04 November 2009 01:22 Felicia A. Williams Money Matters - Insurance
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Anyone who has been laid off understands the difficulty of maintaining group health insurance. By law, the laid off employee can

purchase COBRA benefits to extend health insurance coverage for a period of 18 months. However, COBRA payments are very expensive. In essence the laid off employee will have to pay 100% of the health insurance premium that was previously subsidized by the employer. How can an unemployed individual handle such hefty COBRA insurance payments?

There’s hope! With President Obama’s signature on The American Recovery Reinvestment Act of 2009 (more commonly known as the Economic Stimulus Plan), qualified unemployed individuals can reduce their COBRA payments by 65%. Here's how:

  1. Meet the COBRA reduction qualifications. In order to qualify for the 65% reduction in insurance premiums, you must have ‘involuntarily’ lost your job between September 1, 2008 and December 31, 2009. If you quit your job, you’re not qualified.
  2. Elect to receive COBRA benefits. Some unemployed individuals do not choose to continue the COBRA benefits because of the astronomical expense. With the benefits afforded under the Stimulus Plan, those very same employees who elected not to participate in COBRA now have an additional 60 day extension to change their mind and sign up for COBRA health insurance benefits.
  3. Understand the income requirements. For individuals with an adjusted gross income in excess of $125,000 or couples filing jointly whose income exceeds $250,000 will receive payment reductions on a sliding scale plan; the higher the income, the less of a payment reduction. Furthermore, single filers earning in excess of $145,000 or joint filers with income over $290,000 cannot qualify for the COBRA payment reduction.
  4. Become familiar with the stipulations of the act. For more information visit the US Department of Labor website and access the “COBRA Continuation Coverage Assistance Under The American Recovery And Reinvestment Act of 2009” webpage. You can either print the information or subscribe to receive updates as they occur.

Reduce COBRA Payments

Felicia A. WilliamsABOUT THE AUTHOR: Felicia A. Williams is a freelance writer and webmaster of this website, Visit Hudson Valley.com and No Job for Mom.com. She is also the Insurance Feature Writer for Suite 101.com


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