Labor and Employment

COBRA Assistance Program Running Out for Unemployed


On May 20, 2010, Representative Sander Levin and Senator Max Baucus introduced the American Jobs and Closing Tax Loopholes Act. If passed, this new law does several things, including:

  • Continue and extend the COBRA subsidy through 2010. Eligible workers get a 65% subsidy for up to 15 months. Also, workers who lost their jobs on or before December 31, 2010 are eligible for the subsidy
  • Extends the May 31, 2010 expiration date for the Emergency Unemployment Compensation to December 31, 2010. The program gives workers up to 53 weeks of unemployment benefits

Federal lawmakers are expected to vote on the new law before the extended COBRA and unemployment benefits expire at the end May 2010.


On April 5, 2010, thousands of Americans began losing their COBRA benefits. There were two main reasons: Either they had been out of work for more than the 26-month unemployment insurance/COBRA period, or because the "COBRA subsidy" passed as part of the American Reinvestment and Recovery Act (ARRA) expired.

On April 26, President Obama signed a new law extending the COBRA subsidy through May 31, 2010. As before, eligible workers pay 35% of their COBRA premiums and the coverage provider gets a federal tax credit for the remaining 65%.

As May 31 looms, there's hope for the thousands of Americans and their families who still need help paying for COBRA benefits. Federal lawmakers are working on the American Workers, State, and Business Relief Act of 2010. If passed, the law extends the COBRA subsidy though the end of 2010. It's a law President Obama agrees needs to be passed.

Original Article

The COBRA assistance program is set to expire Dec. 31, 2009, and there is currently no relief for those who will lose their jobs in 2010. However, assistance with payment of COBRA premiums may be continued if proposed legislation is passed that would extend coverage. Bills are pending in both the House and Senate to extend the number of months of COBRA premium assistance for those currently eligible and to make the subsidy available to people laid off through June 30, 2010.

Assistance with COBRA Payments

The economic stimulus bill, also known as the American Reinvestment and Recovery Act (ARRA), that was passed last February, included some relief on COBRA premiums. Employees who lost their jobs were given 65% of their COBRA premium for up to nine months. The COBRA subsidy is currently available to people who were laid off up until Dec. 31, 2009.

To be eligible for COBRA assistance, you must have been involuntarily terminated from your job between Sept. 1, 2008, and Dec. 31, 2009. Also, your income in the year you receive the subsidy cannot be more than $125,000 for individuals or $250,000 for married couples filing their taxes jointly. Eligible individuals pay only 35% of their COBRA premiums and the remaining 65% is reimbursed to the coverage provider through a tax credit.

Assistance Running Out

People who began getting federal COBRA subsidies last March received the last of those subsidies in November. If people started getting subsidies later in the year, their subsidies will expire after nine months.

People who sign up through Dec. 31 can still get the subsidy for up to nine months. Starting in January, anyone who is laid off will not receive the benefit of a COBRA subsidy unless the program, which ends on Dec. 31, is extended. When the COBRA subsidies end, anyone who wants to keep their coverage will have to pay the full amount of the premiums.

Extending the COBRA Subsidy

Congress is currently working on extending the COBRA subsidy for another six months and also trying to increase the subsidy from 65% to 75% of the cost of the premium. Under the proposed legislation, individuals who were enrolled in the original COBRA subsidy since February would continue to receive it until at least May 2010. The new subsidy would extend:

  • The total allowable time an individual could receive the COBRA subsidy by six months (from nine to 15 months)
  • The subsidy to individuals who are involuntarily terminated between Jan. 1, 2010, and June 30, 2010
  • Eligibility for traditional COBRA coverage an additional six months (from 18 to 24 months) for individuals who were terminated at the beginning of the recession in 2008

COBRA Benefits

COBRA is a program that lets you buy an extra 18 months of health insurance coverage through your former employer's policy. COBRA allows people who are unemployed to retain the same plan they had from their previous employer and prevents any discontinuation of their coverage.

Before the ARRA, you had to pay all the premiums yourself. Group health coverage for COBRA participants is usually more expensive than health coverage for active employees because typically the employer pays a part of the premium for active employees while COBRA participants generally pay the entire premium themselves. However, coverage under COBRA is usually less expensive than individual health coverage.

Do You Qualify for COBRA?

A covered employee or family member qualifies for COBRA when they experience certain life changes that trigger the right to continued coverage, including:

  • Voluntary or involuntary termination of employment for reasons other than misconduct
  • Reduction in hours of employment
  • Entitlement to Medicare for covered employee
  • Divorce or legal separation of covered employee
  • Death of covered employee
  • Loss of dependent child status under plan

HIPAA Coverage

The 1996 Health Insurance Portability and Accountability Act (HIPAA) is a law that protects your coverage rights. You may become HIPAA-eligible after you lose employer coverage and use up your COBRA benefits. Once your COBRA expires, you're only HIPAA-eligible for 63 days.

Questions for Your Attorney

  • I am divorced and want to get COBRA coverage from my former spouses' group health plan, is that possible?
  • If I waive COBRA coverage during the election period, can I still get coverage later?
  • Am I eligible for COBRA coverage since I worked for a company that had 10 employees and it went out of business?
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