COBRA Stimulus

The "COBRA Stimulus" is the portion of The American Recovery and Reinvestment Act pertaining to The Consolidated Omnibus Budget Reconciliation (COBRA) Act. COBRA allows eligible people to extend health coverage beyond employment while the stimulus package makes the premiums more affordable and makes the coverage more accessible for eligible ex-employees and their dependents.

Learn about COBRA.

COBRA allows employees who are laid off from their work to retain their health insurance coverage for a certain period of time, depending upon the circumstances. Although not all ex-employees are eligible, COBRA is designed to keep people from suddenly finding themselves without health insurance coverage after a job loss or other potentially unexpected incident.

Purchasing health insurance under an individual policy – or waiting to obtain health insurance until after another job is found - can result in a financially difficult situation. COBRA's intent is to protect people from being uninsured or having to pay exorbitant amounts of money for a policy that is not provided by an employer. Although premiums usually rise with COBRA since the employer no longer pays any portion of the premiums, it may still be less expensive than purchasing a new policy.

The "stimulus" refers to The American Recovery and Reinvestment Act that was signed into law in early 2009. This plan is designed to stimulate the economy and assist corporations and families that are struggling financially during shaky economic times.

The stimulus plan inadvertently prompted many fraudulent scams, so people must take care to carefully study and documentation received regarding the COBRA stimulus. In other words, don't trust an unsolicited document received in the mail from a non-governmental agency that claims to have a rebate check waiting for you because this is probably a fraudulent claim. For specific information regarding The American Recovery and Reinvestment Act, and all the provisions that accompany this Act, refer to Recovery.gov, which is the official government website for the COBRA stimulus and other aspects of this Act.

The portion of the Act that pertains to COBRA reduces the cost of the monthly premiums and makes it simple for people who initially declined COBRA coverage to enroll into the program.

Eligible people already enrolled in COBRA will receive a substantial reduction in the monthly premiums they have to pay; in some instances the discount will be over half of the amount they are used to paying. This reduction in premium costs comes directly from a subsidy provided by the Treasury Department and will be available for a maximum of nine months.

People who were eligible for COBRA, but who declined coverage for whatever reason, may be eligible to now enroll in COBRA at the reduced cost. Whether people are eligible for this special COBRA stimulus enrollment depends largely on the date they lost their job as well as their annual income. Individuals with an annual income over $125,000, or married couples with an annual income over $250,000, are not eligible for the payment subsidy or the delayed enrollment into COBRA.

Your eligibility to receive a reduced monthly premium for your COBRA health care coverage, as well as your eligibility to enroll in COBRA coverage that you initially declined, depends on a variety of factors:

• The date that you were laid off from your job
• Your annual income

Contact your point of contact for your health care plan, or the Human Resources Department of your previous employer, to find out if you qualify for special pricing or enrollment into the COBRA program.

Keep in mind that COBRA benefits extend to eligible family members too, so the COBRA stimulus can result in substantial savings for your entire family for up to nine months.

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