More information about COBRA subsidies, released by U.S. Department of Labor
20 03 09 - 11:32
More details given on COBRA subsidies
Victoria Colliver, Chronicle Staff Writer
The U.S. Department of Labor released more details Thursday about how unemployed workers can take advantage of subsidies offered in President Obama's stimulus package to help them stay on their former employer's health insurance.
Such workers often can extend their employer-sponsored health insurance through a federal law known as COBRA, but it can be prohibitively expensive because the worker has to pay the full cost of coverage. As a way of offering some relief and reducing the ranks of the uninsured, the stimulus package gives eligible workers a 65 percent subsidy for nine months.
But because the $787 billion economic recovery package was passed so quickly, it left employers, workers, benefits attorneys and others scrambling to answer various questions regarding who is eligible for the subsidy and how it will be administered.
On Thursday, the federal government answered some of those questions and offered employers several versions of letters they can send their former employees to inform them about their potential new options under the stimulus provisions.
"It answers a lot of questions, but moreover, it gives employers a template to work with," said J.D. Piro, leader of Hewitt Associates' Health Management Legal Consulting Group. "There's almost no lead time on this. (Employers) have to get these systems up and running, and this gives them some guidance on major questions around what to tell employees."
Employers have until April 18 - that's 60 days from the time the stimulus package was enacted - to inform potentially eligible former workers that they might qualify for COBRA assistance. This applies even to those individuals who initially turned down the option.
Under the provisions, eligible employees - generally those who involuntarily lost their jobs between Sept. 1, 2008, and the end of this year and do not earn more than $125,000 as an individual or $250,000 per couple - have 60 days after the notice is provided to elect COBRA. Once people become eligible for Medicare or other group coverage, they no longer qualify for the subsidy.
Among other things, Thursday's announcement clarified that workers eligible for state COBRA extension laws such as Cal-COBRA, which extends coverage for employees at firms with fewer than 20 workers, qualify for the subsidy.
"I was pleased to see there seems to be the clearest summary to date of what the benefits are," said Mark Boxer, partner in the employee benefits firm DLA Piper's San Francisco offices.
But some questions remain, said Boxer, who hopes to receive a definition of an involuntary termination and a clarification of whether domestic partners qualify for the subsidy if they meet certain criteria.
More information
More information on federal COBRA requirements is available from the U.S. Department of Labor at (866) 444-3272 or www.dol.gov/cobra.