U.S. Labor Department Releases More Details About COBRA Subsidies

Main Category: Health Insurance / Medical Insurance
Also Included In: Public Health
Article Date: 23 Mar 2009 - 0:00 PDT

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The Department of Labor on Thursday released guidelines to employers on how to implement federal subsidies included in the economic stimulus package to help newly unemployed workers cover the cost of health insurance premiums under COBRA, the Detroit Free Press reports (Spangler, Detroit Free Press, 3/19). Under the stimulus package, workers involuntarily terminated between Sept. 1, 2008, and Dec. 31, 2009, whose annual incomes do not exceed $125,000 for individuals or $250,000 for families qualify for subsidies to cover 65% of the cost of premiums under COBRA for as long as nine months (Kaiser Daily Health Policy Report, 3/2). According to the San Francisco Chronicle, the quick passage of the stimulus package "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."

DOL said that employers have until April 18 -- 60 days after the enactment of the stimulus package -- to inform potentially eligible workers of their options regarding COBRA assistance. Employers also must notify potentially eligible former workers who initially declined coverage under COBRA, according to the Chronicle (Colliver, San Francisco Chronicle, 3/20). Those eligible will have until June 16 to decide whether they will use the subsidies (Detroit Free Press, 3/19). Former employees who apply to their group health plan for the subsidy and are denied coverage can appeal their denial directly to DOL (Tumulty, Rochester Democrat and Chronicle, 3/19).

According to the Chronicle, the DOL said that workers eligible for state COBRA extension laws qualify for the subsidy. However, there are still questions regarding eligibility, such as whether domestic partners qualify for the subsidy and the definition of involuntary termination, according to Mark Boxer of the employee benefits firm DLA Piper (San Francisco Chronicle, 3/20).

Reprinted with kind permission from http://www.kaisernetwork.org. You can view the entire Kaiser Daily Health Policy Report, search the archives, or sign up for email delivery at http://www.kaisernetwork.org/dailyreports/healthpolicy. The Kaiser Daily Health Policy Report is published for kaisernetwork.org, a free service of The Henry J. Kaiser Family Foundation.

© 2009 Advisory Board Company and Kaiser Family Foundation. All rights reserved.

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