Overview: Premium assistance
April 2010
The federal economic stimulus package provides up to 15 months of subsidy to help pay monthly
health insurance costs for employees who lose their jobs and qualify under state or federal law
to continue their employer health insurance.
The federal COBRA law and state continuation law exist to help employees – and their families - keep insurance after
certain events such as a job loss. The federal law applies to employers with 20 or more employees. State law covers employers
with fewer than 20 employees and others “not subject to COBRA.”
Normally, terminated employees must pay the full costs to continue their insurance. With stimulus help, the employees’
share is 35 percent.
Employees cannot be required to pay more than their 35 percent share.
Eligibility
You may be eligible if you:
- Involuntarily lose your job from Sept. 1, 2008, through May 31, 2010, or
- lost your health insurance because of a reduction in hours and then lost your job after March
1, 2010, and through May 31, 2010 and
- qualify under federal COBRA law or Oregon's state continuation law to continue your employer
health plan.
- have an employer who remains in business and still offers insurance, and
- have a modified adjusted gross income of less than $125,000 ($250,000 for joint filers).
Individuals with more income can claim the subsidy but will have to repay part or all of the
money through an increase in income tax liability for the year.
- do not have other group coverage available (for example, through a spouse)
- are not eligible for Medicare
How does the subsidy work?
- Eligible individuals pay 35 percent of monthly premium costs.
- If you work for a larger employer (20 or more employees), the employer
will pay 65 percent of the monthly premium and claim reimbursement from
the federal government as a credit against payroll taxes.
- If you work for a smaller employer (19 or fewer employees), the insurance
company will pay the 65 percent and claim the tax credit.
How long does the subsidy last?
- Up to fifteen months or
- You become eligible for any other group health plan (including insurance from a spouse’s
employer) or Medicare, whichever comes first.
You must notify your former employer, insurance company or plan administrator if you can get other coverage. If you don't,
the IRS can require you to repay any ineligible subsidies plus a 10 percent penalty.
Health insurance features
- The health insurance plan is the same plan you had with your employer.
- Your former employer can let you select a plan that is different than the one you had when working although it can’t
be a more expensive plan.
- You won't have to wait to have existing medical conditions paid for by insurance if you previously met your pre-existing
condition exclusion period.
- Dental/vision insurance may qualify for the subsidy as part of your medical coverage.
How to get benefits
COBRA-eligible employees (business
with 20 or more employees)
- You should receive forms to fill out but may also ask your former employer for the forms.
- Your new coverage begins the date your old coverage ends.
- You have 60 days (generally from the date on the notice) to return the forms.
- You can decide which family members to keep insured.
State continuation employees (business
with fewer than 20 employees)
- You should receive forms to fill out but may also ask your former employer or insurance
company for the forms.
- Your new coverage begins the date your old coverage ends.
- You have 31 days from the day you receive the notice to return the forms to the insurance
company.
- You can decide which family members to keep insured.
Example
Sue lost her job in December 2009. She received a notice explaining that she could keep her
employer plan and that she might be eligible for a federal subsidy that would pay 65 percent
of the monthly premium for up to 15 months. Without the subsidy, she would have had to pay $1,000
monthly to continue her former employer's insurance for the family. With the subsidy, the cost
dropped to $350 monthly. Sue, who lost her job in a downsizing, filled out the paperwork for
the subsidy and to continue coverage for her family. If she later finds the $350 is too steep
she can cover some family members and not others. Meanwhile, if she finds a job with insurance
before her 15 months of subsidy is up, she must immediately report that to her former employer
or insurer. She is no longer eligible for the subsidy.
Appeals
- COBRA-eligible employees who believe they were improperly denied a subsidy
can ask the U.S. Department of Labor for review. Information is available
at: http://www.dol.gov/ebsa/subsidydenialreview.html
- State continuation-eligible employees who believe they were improperly
denied a subsidy should ask the federal Centers for Medicare & Medicaid
Services (CMS) for review. Visit: www.continuationcoverage.net
or call 1-866-400-6689. The application you must use to
appeal subsidy denials is posted online. You may also e-mail questions to:
ContinuationCoverage@maximus.com.
CMS has contracted with Maximus Federal Services, Inc., to review appeals.
Questions?
