Your COBRA Subsidy Is Ending, What Now?

The American Recovery and Reinvestment Act of 2009 (ARRA) provided a 65% reduction in premiums for health benefits under the Consolidated Omnibus Budget Reconciliation Act of 1985, which you probably know as COBRA. Now the benefits are ending for the first wave of unemployed people who signed up at the beginning of the program.

Here’s how it worked:

Workers who have lost their jobs may qualify for a 65 percent subsidy for COBRA continuation premiums for themselves and their families for up to nine months.

Eligible workers will have to pay 35 percent of the premium to their former employers.

To qualify, a worker must have been involuntarily separated between Sept. 1, 2008, and Dec. 31, 2009. Workers who lost their jobs between Sept. 1, 2008, and enactment, but failed to initially elect COBRA because it was unaffordable, get an additional 60 days to elect COBRA and receive the subsidy.

If you’re let go between now and Dec. 31st, you’ll still be able to get 9 months of subsidized COBRA, but for those whose subsidies are running out and are still unemployed — there’s not a lot of good news.

Those workers will now be on the hook for 102% of their COBRA premiums. CNNMoney says the average cost for health insurance per family under COBRA will jump from $398 to $1,137 per month.

So what do you do?

As far as we can tell you have few options:

1) Pay it.

From the LA Times:

“The best idea for people losing the subsidy right now would be to pay the higher December premium fee,” says Cheryl Fish-Parcham, deputy director of health policy at FamiliesUSA. That would give consumers a month to search out new options and decide whether COBRA coverage is too expensive without the government’s financial assistance.

Fish-Parcham also advises people to check their policy to see when the premium is due. “You do have a 30-day grace period each month to pay your bill, but after that period, your insurance will be canceled. The premium is likely less expensive than anything else you’ll find on your own, with the same level of coverage.”


2) Get on someone else’s plan, such as a spouse.

3) Find a cheaper plan for your kids and keep only yourself/spouse on the plan.

CNNMoney says:

If you have kids, they may qualify for the Children’s Health Insurance Program. This program is set up to provide insurance to families who don’t qualify for Medicaid, but can’t afford private insurance. Requirements for S-chip, as it’s known, is at insurekidsnow.gov.

4) Shop for private health care insurance.

The LA Times says:

It may be possible to find comparable, or even slightly less- expensive, plans at sites such as http://www.ehealthinsurance.com, the largest online health insurance broker. And FamiliesUSA offers a state guide to finding health insurance at http://www.familiesusa.com. Click on “Resources for Consumers” to the left of the home page and then click “California” or another state.

Losing your 65% COBRA subsidy [CNN]
What to do now that the COBRA subsidy is ending [LA Times]
COBRA Health Insurance Continuation Premium Subsidy [IRS]