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Cobra Premiums Reduced by “American Recovery And Reinvestment Act”

Congress has passed the “American Recovery and Reinvestment Act of 2009” which was signed into law by President Obama. This act includes a 65 percent subsidy on the cost of Cobra premiums for nine months. The Cobra recipient will only pay 35 percent of the overall Cobra premium for that period.

The coverage expires on the earlier of the date the individual becomes eligible for major medical employer-sponsored coverage or Medicare, nine months, or the end of the maximum required period of Cobra continuation. More current information is available on this page that is more current. It also includes information about The Affordable Care Act.

The Cobra subsidy is available, if:

*You were laid off between September 1, 2008 and December 31, 2009; and

*At the time of your layoff, you were covered by an employer-sponsored policy  and

*Your annual income is less than $125,000 or your annual family income is less than $250,000; and

*Your prior employer must still be actively in business.

This subsidy is not retroactive and will only apply from the date of the law’s passage. If you are already enrolled in Cobra, and began paying premiums before the Act effective date, you will not receive a credit for the Cobra premiums you paid prior to the effective date.

However, if you were layed off on or after September 1, 2008 and did not Select Cobra within the 62-day window, you are allowed to become eligible for Cobra again, as long as your former employer still exists and offers group coverage.

Despite the 65% subsidy, it is still very possible that Cobra’s rate will be substantially higher than an individual plan. And, of course, the Cobra subsidy only lasts for nine months, leaving open the possibility that a chronic health condition could occur, thus, making it more difficult to qualify for an individual or family health insurance policy.

COBRA Ohio Options And How To Apply

You May Not Need COBRA After 2013

Additional Cobra details can be found from the United States Department of Labor

If your Cobra coverage is close to ending, we’ll find an affordable Ohio health insurance plan to meet your needs. You can view instant quotes at the top of the page or contact us.


UPDATE 2011- Of course, this subsidy has now expired.

UPDATE 2013- It still has expired! However, there is good news for folks that are on COBRA and will be losing coverage. Typically, you would be facing huge rate increases when you have to convert to a HIPAA plan (when benefits are exhausted).

However, now (as of 2014), you will be able to purchase affordable medical plans through an Open Enrollment through the State Health Marketplace. Since losing benefits, should be a (qualifying event), instead of waiting until November and December, you may be able to obtain benefits at any time.

Also, starting in 2014, if you lose benefits from an employer-sponsored policy, you will be able to compare COBRA vs. Open Enrollment prices. If you are in great health, perhaps purchasing a “Bronze”  plan may make the most financial sense. Also, the availability and amount of the new federal tax subsidies will depend on your income.

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5 Responses

  1. Holly A. Roberts says:

    The change to me is a good step in the right direction. It would be great to pay the whole amount but part of it will have to do.

  2. KrisBelucci says:

    Hi, cool post. I have been wondering about this topic,so thanks for writing.

  3. CA says:

    Finally someone who can write a good blog ! . This is the kind of information that is useful. I’m a student at Kent State and I do pay for my own policy so I read a lot of your stuff. Subscribing to your RSS feed now. Thanks

  4. Derik Tutt says:

    You made it make sense for me. I can certainly appreciate someone who knows how to make a complex topic so understandable. You are the go to man for medical information!

  5. X-Man says:

    It sounds like you’re creating problems yourself by trying to solve this issue instead of looking at why there is a problem in the first place.