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COBRA Health Insurance Premium Reduction

Background and General Information

 In February of 2009 (and amended March 2, 2010), the federal government enacted the American Recovery and Reinvestment Act of 2009 (ARRA). Section 3001 of that Act provides for a 65 percent reduction in the health insurance premiums of individuals who were involuntarily terminated from their jobs between September 1, 2008 and March 31, 2010, and who elected COBRA continuation health coverage.  To qualify, individuals must experience a COBRA qualifying event that is the involuntary termination of a covered employee's employment.

The involuntary termination must generally occur during the period that began September 1, 2008 and ends on March 31, 2010. (An involuntary termination of employment that occurs on or after March 2, 2010 but by March 31, 2010 and follows a qualifying event that was a reduction of hours that occurred at any time from September 1, 2008 through March 31, 2010 is also a qualifying event for purposes of ARRA.) The premium reduction applies to periods of health coverage that began on or after February 17, 2009 and lasts for up to 15 months.

To be eligible for this premium reduction assistance, you must meet three criteria:

  • involuntarily terminated between September 1, 2008 and March 31, 2010

  • eligible for COBRA continuation coverage any time during that period

  • elect to receive COBRA coverage

This premium assistance extends for nine months beyond the date that you elect COBRA coverage; thus, if you began COBRA coverage on December 1 of this year, you are eligible to receive the 65 percent premium reduction assistance until September 30, 2010.

To read the IRS Notice on Premium Assistance for COBRA Benefits, including questions and answers, click here.

For comprehensive information on COBRA Continuation Coverage Assistance, go to the Department of Labor's site at www.dol.gov/ebsa/cobra.html

Latest News on Extending COBRA Assistance

There are currently two bills (H.R. 3930 in the House, S. 2730 in the Senate) to extend for six months the ARRA COBRA benefits for persons who have lost their health benefits due to involuntary layoffs. Unfortunately, most independent analysts feel that the chances of either one getting through Congress before the end of the year are extremely slim, simply because there are so many other huge issues on the boards.

We'll be keping track of these bills here, but if you want to do it yourself, it's easy: just log onto GovTrack at www.govtrack.us  and sign up to track one or both of these bills. Then, every time there is any change in the bill--for instance, when new sponsors are added or when the bill leaves committee--you'll be notified by email.

Update: December, 2009

  • H.R. 3930 - New cosponsors added: Rep. Forbes [R-VA4], Rep. Gerlach [R-PA6]

  • H.R. 3930 - New cosponsors added: (Rep. Frank [D-MA4], Rep. Doggett [D-TX25], Rep. Lewis [D-GA5]), Rep. Filner [D-CA51], Rep. Jackson [D-IL2], Rep. Brown [D-FL3], Rep. Larsen [D-WA2]

Latest Actions:

  • H.R. 3930 - Dec 8, 2009: House Education and Labor - Referred to the Subcommittee on Health, Employment, Labor, and Pensions.

  • H.R. 3930 - Oct 26, 2009: Referred to House Ways and Means

  • S. 2730 - Nov 4, 2009: Read twice and referred to the Committee on Health, Education, Labor, and Pensions

Letter from NEA President on COBRA Extension

NEA continues to watch the bills in Congress that would extend the COBRA premium subsidy program (HR 3930 and S 2730). 

NEA remains hopeful that Congress will act soon as the deadline to apply for the COBRA premium subsidy, December 31, 2009, is fast approaching.  Both bills would allow COBRA qualified beneficiaries involuntarily terminated between January 1, 2010 through June 2010 to qualify for the subsidy and would increase the subsidy period to a maximum of 15 months. They would also provide current beneficiaries with six more months of COBRA premium subsidies, so that they would have a total of 15 months of subsidized COBRA premiums.  

Under the Senate bill the subsidy amount would increase to 75 percent, and the subsidy would also be available to individuals with COBRA coverage due to a reduction in employment hours.      

The current COBRA premium subsidy program provides up to nine months of reduced premiums and requires, among other things, that both involuntary employment termination and COBRA eligibility occur on or before December 31, 2009.  For example, COBRA beneficiaries who started receiving the subsidy on March 1, 2009 must pay full COBRA premiums for coverage on or after December 1, 2009.  If an individual was involuntarily terminated on December 15, 2009 and his/her health benefits end that day, they are eligible for 9 months of COBRA premium subsidy starting on December 16, 2009 through August 2010. 

If an individual is involuntarily terminated on December 15, 2009 and their coverage ends on December 31, 2009, they would not be eligible for the premium subsidy because COBRA takes effect on January 1, 2010.      

NEA will certainly alert members if legislation to extend the COBRA premium subsidy program occurs.    

Dennis Van Roekel, President
National Education Association