Stimulus Package Makes COBRA More Affordable

Terminated employees can get help paying for health insurance under the economic stimulus package.

The law offers a 65 percent subsidy of COBRA premiums for nine months—meaning terminated employees will only have to pay 35 percent of their premium during that time. COBRA is the law that allows terminated workers, with some exceptions, to continue coverage in their group health plan at their own expense.

Keep in mind that not all employers are subject to the law. Employees of small businesses—those with fewer than 20 workers—won’t be able to get the subsidy.

Not all employees are eligible. The subsidy is reduced or eliminated for individuals earning more than $125,000 and joint filers earning more than $250,000.

Employees also must:

  • Elect COBRA coverage
  • Have lost group health plan coverage due to involuntary termination of employment (other than for gross misconduct)
  • Be terminated on or after Sept. 1, 2008, and ending Dec. 31, 2009

The COBRA premium subsidy is available on the first COBRA premium payment date after the law’s enactment (March 1, 2009).