With millions of Americans having lost their jobs over the past year one of the biggest concerns is keeping health insurance. Your worst nightmare would be to lose your job, lose your health insurance and then have a major health problem. The result could spell financial ruin for you and your family. And this exact scenario is playing out all over America on a daily basis. The good news is there is help in the form of the American Recovery and Reinvestment Act of 2009 which was signed into law by President Obama on February 17, 2009. This law provides a 65% subsidy by the federal government for premiums paid into your COBRA health plan. COBRA is part of a law passed in 1985 that guarantees qualified terminated employees the right to continue health insurance coverage with their previous employer for a period of eighteen months. The idea was to make certain the terminated employee could maintain continuous coverage until he or she landed a new job or made other arrangements for health coverage. The primary problem with COBRA health insurance coverage is that it tends to be very expensive since you must now pay the entire premium. Recognizing this as a major financial burden during this severe economic recession, Congress passed the COBRA premium subsidy legislation.
If you qualify, you’ll only have to pay 35% of the total premium costs. To qualify, you must have been or become involuntarily terminated from employment on September 1, 2008 through December 31, 2009 and otherwise be eligible for COBRA health insurance coverage. Once qualified, the subsidy can last for up to nine months. The subsidy may terminate sooner than nine months if you become eligible under another health plan, begin receiving Medicare benefits or if your normal period of COBRA coverage expires. You do not qualify for benefits if your adjusted gross income exceeds $290,000 for joint income tax filers or $145,000 for single filers. In addition, there is a ‘phasing-out’ of subsidy if your adjusted gross income is between $250,000 and $290,000 for joint filers and $125,000 and $145,000 for single filers.
If upon termination you did not elect COBRA coverage, it’s not too late. Under the new law, your prior employer must notify you of a special election allowing you to ‘opt-in’ to the COBRA plan and give you 60 days to complete the election. Again, this assumes you were eligible for COBRA benefits.
The COBRA subsidy program is a vital benefit for those who qualify…allowing you to keep health insurance until you are once again employed or find another source for health insurance.
Readers Question: I am the owner and insured under a $500,000 Survivorship Life Insurance policy. If the insurance company goes bankrupt, what happens to my life insurance policy? Dr. T.- Birmingham, AL.
Answer: According to David Parsons, Deputy Commissioner of the Alabama Department of Insurance, “The Alabama Life and Health Guaranty Fund protects policyholders for losses up to $100,000”. Beyond that you would be a ‘first-in-line’ creditor of the defunct company. The Commissioner’s office also coordinates efforts to transfer policies and policy owners to other insurance companies, often resulting in no lost benefits.