Some Jobless Workers Might Not Be Eligible for Federal COBRA Subsidies
Thousands of laid-off workers might not qualify for federal COBRA subsidies offered under the federal economic stimulus package because they worked for companies that have gone out of business or their former employer was too small, USA Today reports (Block, USA Today, 4/23). Under the federal economic stimulus package, workers involuntarily terminated between Sept. 1, 2008, and Dec. 31, 2009, whose annual incomes do not exceed $125,000 for individuals or $250,000 for families qualify for subsidies to cover 65% of the cost of premiums under COBRA for as long as nine months (Kaiser Daily Health Policy Report, 4/17).
The Obama administration estimates that more than seven million U.S. residents will qualify for the new federal COBRA subsidies. However, certain former employees do not qualify, such as those who were laid off from companies that have closed and discontinued their group health insurance, according to Michael Langan, principal with Towers Perrin (Block, USA Today, 4/23).
In addition, the federal COBRA law applies only to companies with 20 or more employees. Although 39 states and the District of Columbia have instituted "mini-COBRA" laws that require smaller firms to provide laid-off employees continued access to group coverage, such laws differ by state, according to Families USA. Some states extend coverage for less than the 18 months granted to larger companies under the federal law (Block/Paul, USA Today, 4/23). In addition, there are some "gaps" between state and federal law that result in laid-off employees receiving a reduced subsidy or no subsidy at all, according to USA Today (Block, USA Today, 4/23).