Raising Women’s Voices

Making Cobra Stimulating

Posted in Affordability, DC Reform by raisingwomensvoices on February 19, 2009

As part of the stimulus package just signed in to law, the federal government will provide a nine month subsidy covering 65% of Cobra premiums for those that apply. Those that originally decided not to continue with Cobra but now want to, have sixty cobradays from receiving notice to sign up.

The deal can affect those laid-off between September 1, 2008 and December 31, 2009. It phases out for individuals with an adjusted gross income of $125,000 or $250,000 for married couples who file jointly.

In 2007, fewer than 10% of unemployed workers opted for Cobra, which can cost up to $13,000 per year for a family. Once unemployed, workers must pay the entire premium in addition to a 2% administrative fee.

The plan includes a provision allowing laid-off workers to switch to cheaper health-care plans in Cobra if their employer offers it, without waiting for an open-enrollment period. And it protects those with pre-existing conditions from having difficulty finding a new plan to keep them insured.

One flaw in the plan is that it will make it much more expensive for employers to provide health insurance to employees, as well as to hire new workers.

For further information, check out the article in the Wall Street Journal

sara siegel

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