Health Insurance: A Bit of Good COBRA News
Personal finance guru Steve Zimmerman brings us some welcome good news that may help you keep health insurance if you’re laid off.
This new subsidy helps make it more affordable and possible to keep health insurance.
In our February special layoff issue, Personal Finance focused on alternatives to paying enormously high COBRA payments. COBRA enables laid off workers to retain their health insurance through their former employer for up to 18 months after they leave the organization.
A Families USA study shows what you probably already know if you’ve been laid off. The health advocacy group found that in 41 states, average COBRA payments amount to more than three-quarters of the average unemployment benefit!
Well, finally – some good news.
The recently enacted American Recovery and Reinvestment Act of 2009 (stimulus package) offers relief for laid-off workers by offering a 65 percent federal subsidy on COBRA premiums for a period of 9 months.
If you were laid off after August 31, 2008, and before January 1, 2010, you will be responsible for only 35 percent of your COBRA payment. This new subsidy went into effect March 1.
Even if you declined COBRA coverage when you were let go because of the expense – or any other reason – you can go back and accept it now. COBRA coverage is available up to 18 months from your last day of work.
Organizations are required to let workers know of this change by April 18. But if your organization does not contact you, you may want to go ahead and call the human resources department.
Nonprofit employers to be reimbursed through payroll tax
Employers have to cover the remaining 65 percent but get reimbursed through their payroll tax form 941. Employers should consult with their payroll service or accountant for more information on how to claim this subsidy.
COBRA insurance is one of the only options available for older individuals or people with a history of health conditions.
This new subsidy goes a long way to making it more affordable and possible to provide yourself and your family members with health insurance.
See also from Steve Zimmerman: When You Lose Your Health Insurance Coverage
Have you struggled to hold on to your health insurance? Let other Blue Avocado readers know how you’re coping (or not) in Comments.
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About the Author
Steve Zimmerman, CPA, MBA, is principal at Spectrum Nonprofit Services, a finance and strategy consulting firm based in Milwaukee. With Jeanne Bell and Jan Masaoka, he co-authored Nonprofit Sustainability: Making Strategic Decisions for Financial Viability, published by Jossey-Bass in 2011. In addition to writing the Finance & Strategy column for Blue Avocado and consulting to nonprofits across the country, Steve conducts train-the-consultant sessions how to use the book’s framework with nonprofits in strategic and/or business planning. His site includes templates and other materials based on the book.
Articles on Blue Avocado do not provide legal representation or legal advice and should not be used as a substitute for advice or legal counsel. Blue Avocado provides space for the nonprofit sector to express new ideas. The opinions and views expressed in this article are solely those of the authors. They do not purport to reflect or imply the opinions or views of Blue Avocado, its publisher, or affiliated organizations. Blue Avocado, its publisher, and affiliated organizations are not liable for website visitors’ use of the content on Blue Avocado nor for visitors’ decisions about using the Blue Avocado website.
if I already paid this year can I get a refund of the 65% I paid too much?
This information at the state of Oregon’s website should answer your question: “If you are already enrolled in COBRA, you are eligible for the subsidy starting with the first period of coverage on or after Feb. 17, 2009. Since most people pay monthly, the subsidy for most people would begin March 1.
Additional note: (your previous employer should be sending you Stimulus information by April 15 or so…)
Good and very informative post.