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Recently Unemployed? Understand Your Health Insurance Options

By Meredith Ledford on December 19th, 2009
Health Insurance

Although the US unemployment rate declined to 10% in November 2009, there are still nearly 15.4 million Americans looking for work. This high rate of unemployment jeopardizes health coverage for the millions of people who depend on employer health insurance for medical coverage.

In response to the recession, the American Recovery and Reinvestment Act of 2009 (ARRA) provides a nine-month subsidy, to some of the unemployed, to pay COBRA premiums. However, the subsidy is ending for the first round of beneficiaries and many will likely find the full COBRA premium to be unaffordable during these tough economic times.

If you are recently unemployed, it is important that you not only understand COBRA, but investigate all of your insurance options. Get a free health insurance quote to help pick the best option for you.

What is COBRA?

If you lose your job because of layoffs, downsizing or another qualifying event, you are able to continue your employer-sponsored coverage for up to 18 months through COBRA. Under the original COBRA legislation, you would have been required to pay the full COBRA premium to continue your health insurance coverage. For many this was a significant cost barrier. To help you maintain coverage during the current recession, the federal government is providing temporary COBRA subsidies through ARRA.

Who is eligible for COBRA and the COBRA subsidy?

Just because you are unemployed, does not mean you qualify for COBRA. Under federal law, you only qualify for COBRA if you were:

  1. Insured by employer-sponsored coverage before losing your job
  2. Worked for a company with 20 or more full-time workers

If you were fired or the company went out of business, you do not qualify for COBRA.

In order to qualify for the nine-month COBRA subsidy, you must be eligible for COBRA and have experienced a qualifying termination event between September 1, 2008 and December 31, 2009. The first round of subsidies became available in March 2009. In order to be eligible for the full subsidy, your same year income cannot exceed $125,000, if you are single, or $250,000 if you are married.

How much does COBRA cost with and without the subsidy?

Under the original COBRA legislation, you would have had to pay the full premium, plus an additional 2% of the premium to cover administrative costs to maintain coverage under COBRA. Under ARRA, if eligible, you receive a nine-month subsidy that leaves you responsible for paying 35% of the COBRA premium. The U.S. government reimburses employers and insurers for the remaining 65% of the premium.

What do you do if your COBRA subsidy is ending or you are ineligible for COBRA or the COBRA subsidy?

If you began receiving the COBRA subsidy in March 2009 or April 2009, your nine-month subsidy ended in November or will end this month. If this is your situation, or you do not qualify for COBRA or the COBRA subsidy, you should look for affordable health insurance to ensure that you and your family are covered. Get your free health insurance quote here to ensure your medical needs do not go unmet.

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