Losing a job can be a traumatizing episode in life but the notion of losing your medical benefits and becoming ill, or involved in some sort of unexpected accident, can be cataclysmic. The Consolidated Omnibus Budget Reconciliation Act (or COBRA as it’s more widely known) of 1985, was brought to life to equip those who lose their jobs and medical benefits with a viable option to avoid such situations.
Sadly, COBRA can be quite expensive (as much as $400.00 for an individual per/month) for anyone, let alone for someone who has lost their job. The majority of people out of work elect to bypass insurance protection altogether and take their chances of living without medical coverage. Statistics indicate that only about 10 percent of Americans eligible for COBRA insurance each year decide to use it–mainly due to cost. Others are fortunate enough to negotiate a partial COBRA subsidization into their termination or exit packages, but it’s more of a common assumption that the ex-employee will be left holding the bag to cover the entire cost.
Congress to the Rescue
Earlier this year, Congress passed the American Recovery and Reinvestment Act, which was a byproduct of the 787 billion-dollar stimulus package. Part of the legislation was focused on COBRA initiatives, a quest to improve the program, and the effort to carefully explore what measures could be put into place to make the program more affordable to the many Americans that are losing their jobs at unprecedented rates.
Extensive modifications have been made in general, but the crux of the plan calls for eligible individuals to pay only 35 percent of their COBRA premiums and the remaining 65 percent is reimbursed to the coverage provider through a tax credit. The premium reduction applies to periods of health coverage beginning on or after February 17, 2009, and lasts for up to nine months for those eligible for COBRA during the period beginning September 1, 2008 and ending December 31, 2009, due to an involuntary termination of employment that occurred during that period.
The new stimulus law also contains a special enrollment opportunity for workers who were laid off between September 1, 2008 and February 17, 2009, but had declined COBRA coverage at that time. These individuals must be given a second chance to elect COBRA coverage and take advantage of the reduced premiums. Employers will be required to provide new COBRA notices for all terminated employees and extend notices for employees who qualify for subsidy assistance.
Employers and Employees in a Frenzy
The new changes have left both employers and employees scrambling to decipher through the many changes and learn more about the new procedures. Since April, our Employers Services Division has partnered with USI Southwest to conduct training sessions for employers at various Workforce career centers around town. Additional sessions are planned during the month of June. If you are an employer and would like to register for a future session, call (713) 688-6890 or send an e-mail to: Placementinfo@wrksolutions.com.