Cobra Continuation Assistance under the Act

At Cobra Help Center we get a lot of calls concerning the Cobra premium reductions that where put into place in 2009. These widely know yet misunderstood programs where an attempt to reduce the premium burden on many unemployed individuals. This Federal Government action was an attempt to stem the tide of discontent among the millions of people who were unemployed during the economic down turn. Through this legislation, COBRA premium would be subsidized by up to 65% by reducing the amount the COBRA beneficiary would have to pay each month to their former employer. The former employer would get a tax credit of 65% of the COBRA participant’s actual premium when they filed their payroll tax.  It’s like robbing Peter to pay Paul, when in fact, Peter just robed himself. The important part of the entire program to remember is that the premium subsidy is going to come out of the employers pocket so the employer is not really going to be an advocate for your cause. Also, the premium reductions would apply to coverage that began on or after February 17, 2009 and last up to 15 months.

Under the Unemployment Compensation Extension Act those premium reduction where not extended past the ending date of May 2010. 

An eligible individual for the premium reduction is the employee or a family member who elects COBRA coverage.  That election must be made in a timely fashion following a qualifying event. By timely fashion we mean, it has to be within the required time frames allowed for in the COBRA rules. No one, be it an employer or COBRA administrator, is going to give you any latitude if your late paying or missing paperwork, you will be dripped and lose your benefits. Therefore, it is critical that you know and follow all of the rules when qualifying for COBRA coverage. 

For premium reductions, qualifying events generally related to an involuntary termination of employment that occurs at any point from the following dates. September 1, 2008 through May 31, 2010 or March 2, 2010 through May 31, 2010.

The rules that apply to the qualifying event are the involuntary termination that includes reduction of hours and the reduction of hours occurred at any time from September 1, 2008 through May 31, 2010. (A reduction of hours is a qualifying event when the employee and his/her family lose coverage because the employee, though still employed, is no longer working enough hours to satisfy the group health plan’s eligibility requirements.) 

The standard rule is that the maximum period of continuation coverage is measured from the date of the original qualifying event (for Federal COBRA, this is generally 18 months). The premium reduction however, provides that the 15 month premium reduction period begins on the first day of the first period of coverage for which an individual is eligible. This is of particular importance to individuals who experience an involuntary termination following a reduction of hours. Only individuals who have additional periods of COBRA (or state continuation) coverage remaining after they become assistance eligible are entitled to the premium reduction. So you must clearly understand and apply the rules that are specific to your situation. 

What you need to keep in mind here, is that your former employer is on the hook for 65% of your premium. That’s money is real to them and coming out of their pocket before they get any relief from the Federal Government in the form of a tax payment reduction. Helping you get the premium reduction is probably the last thing they want to do with their money. 

Additionally, COBRA continuation coverage will include continuation coverage required under Federal and State laws. Comparable continuation coverage at the state level should not be confused with the Federal regulations.   A good example of this is Cal Cobra in California and open enrollment plans in the State of Massachusetts. 

Although anyone who is terminated past the writing of this article would not qualify for premium reductions it is important to be aware of the rules so that you are not misinformed of your eligibility. 

Of special note is that those individuals or families who are eligible for other group health coverage (such as a spouse's plan or new employer’s plan) or Medicare are not eligible for the premium reduction. There is no premium reduction for periods of coverage that began prior to February 17, 2009. 

If you need help regarding COBRA Continuation, Contact Us today! Our qualified underwriters will work with you to explain your best option to continue your coverage and remain continuously insured. You may also click below to submit a quote request!