Health reform, if it goes through, won't take effect for at least a couple of years. But for some people, health insurance help came last Saturday, when the president extended the COBRA subsidy.
COBRA, which stands for the Consolidated Omnibus Budget Reconciliation Act, has long enabled many people who lose their job to keep their insurance, generally for 18 months, at 102% of the full cost, meaning the portions paid by both the employer and employee. But such coverage is expensive, and many people can't afford it. With so many Americans unemployed at once, the subsidy was deemed necessary to prevent the percentage of uninsured Americans from growing dramatically.
The subsidy was launched in March and paid 65% of the health insurance premium cost for nine months for workers laid off between Sept. 1, 2008, and Dec. 31, 2009 -- saving families an average of $722 per month on average health insurance premiums of $1,111.
With the just-signed extension, families get 15 months of subsidy instead of just nine. And the extension will apply retroactively even to those whose subsidy ended between Nov. 30 and Dec. 21 (the time between the end of the initial legislation and the start of the new measure), according to information provided by the Department of Labor.
Under the extension, a worker now qualifies for COBRA premium assistance if he or she was laid off involuntarily (meaning not fired for cause) between Sept. 1, 2008, and Feb. 28, 2010, and is eligible for COBRA assistance. Workers are generally eligible for COBRA if they received their health insurance through their employer. (For full details on eligibility, log on to www.dol.gov/cobra or call a Department of Labor benefits specialist at  444-3272.)
Though COBRA coverage generally lasts up to 18 months, the current extension provides the premium subsidy for up to 15 months more. A new analysis just released from benefits consulting firm Hewitt Associates, based in Lincolnshire, Ill., found that average monthly enrollment rates in COBRA healthcare plans among subsidy-eligible workers have increased by 20 percentage points since the COBRA subsidy began.
There is no information on whether another COBRA extension will be signed by President Obama.
COBRA -- and the premium subsidy -- ends if the individual becomes eligible for other employer-sponsored healthcare coverage (through a new job or a spouse's new job, for example) or Medicare.
Some people eligible for the subsidy might have dropped coverage when their COBRA subsidy ended in November or December because the full cost proved prohibitive. Employers must give those who did that the opportunity to pay back premiums and remain covered, explains Karen Frost, a consultant at Hewitt Associates. Payment must be made within 60 days of the date when the subsidy initially expired or 30 days after notice of failure to pay is sent.
And for those former employees who kept COBRA coverage after the subsidy first expired and paid the full 102% cost themselves, employers must provide a reimbursement for overpaid premiums with a refund or, if applicable, a credit toward future premium balances.