COBRA subsidy has some holes

 

Friday, Apr 24,2009, 11:00:38 AM   Click:

Copyright 2009 Gannett Company, Inc.All Rights Reserved USA TODAY

23 April 2009 Thursday FIRST EDITION

SECTION: MONEY; Pg 1B

LENGTH: 407 words


TITLE: COBRA subsidy has some holes, are not all laid-off workers qualify for benefits

Signature: Sandra Block



A new federal grant to help laid-off workers pay for health insurance may be out of reach for thousands of workers without jobs because they worked for a small business or their former employer went bankrupt.

The grant, part of the economic stimulus package passed earlier this year, covers 65% of premiums for COBRA licensed persons between 1 September 2008 and the end of this year. The grant is available for a maximum of nine months.

COBRA allows people who leave their jobs to pursue their former employer for health insurance for up to 18 months. In the past, however, individuals had to pay 102% of the premiums, making it unaffordable for most unemployed workers COBRA. For a family, the average cost of non-subsidized COBRA premiums exceed $ 1,000 per month. With the grant, the average family pays $ 377 per month, according to the Kaiser Family Foundation.

Companies are required to inform the former workers on subsidies by April 18. The White House believes more than 7 million unemployed workers eligible. Reasons, some not:

* His former employer went bankrupt. If an employer terminates its health plan group, the former employees are not eligible for COBRA, said Michael Langan, Principal, Towers Perrin, a human resources consultant. This makes them ineligible for the subsidy, too, "he says.


During the last four months of 2008, the most recent data available, 11,645 companies filed for Chapter 7 protection against bankruptcy, up 70% over the same period in 2007, according to the Administrative Office of U.S. Courts .

* They have worked for a small business and live in a state that does not provide COBRA coverage. The federal COBRA law applies only to businesses with 20 or more workers. Some 39 states and Washington, DC, have adopted a "mini-COBRA" laws that require small businesses that provide coverage of the group to allow former employees to continue coverage. However, differences between federal and state laws remain, leaving the redundant workers with a reduction of the subsidy or not. "There are many people who can not take advantage of the full COBRA subsidy," says Ron Pollack, executive director of Families USA.

Unemployed workers who have not received any notice or have any questions about their eligibility should contact the company that manages their employee benefit, Langan said. The Department of Labor also has a fact sheet on the grant at www.dol.gov / EBSA / cobra.html.