US Stimulus Aid For COBRA Questions and Answers

by Marilyn Katz

Many Americans do not know how to get US stimulus aid for their COBRA premiums after they have been terminated from their job. There has been a lot of confusion and questions about sources of information.

What is COBRA?

The federal COBRA law forces some, but not all, companies to extend group health benefits for several months after an employee is terminated. But you should also understand that the company does not have to pay the same contribution towards those health insurance premiums that they did pay for active employees! So just when a laid off employee loses their income they find that their health insurance bill has increased.

The financial stimulus bill included some aid for terminated workers by allocating funds to pay part of the bill. But there is lots of confusion about how to collect that money, and that is what I want to address.

Laid off employees should be notified about this aid. The former employer should do this, but this may be a slow process. Workers do not know how to get help paying the premium. They have many questions because they know that health insurance is important to their families, but are concerned about the expense.

Former Employers Should Answer Questions

The former company should pay the stinulus percentage of the COBRA permium (up to 65%), and then get paid by the government. The ex-employee will pay 35%, instead of 100% like they would have done before. This is helpful because financially strapped unemployed people will not have to pay the whole amount, and then wait for government reimbursement. So the HR departments of the companies shold have information about this!

COBRA Second Chances

Many terminated employees did not sign up for COBRA because of the price. But this additional aid may be an incentive to reconsider. A $1,000 a month premium may have been out of reach, but a $350 a month (35%) premium may be easier to handle.

Time Limits on Stimulus Aid

Normal COBRA extensions last for 18 months, but the US stimulus aid only lasts for 9 months. After an ex-employee exhausts the 9 month benefit, they will be responsible for the whole payment.

Since COBRA bills average $1,000 a month for family coverage, this can be a huge concern. But hopefully, 9 months of subsidies can help many families until another job and health insurance plan is found.

Do All Workers Get COBRA after Termination?

Not all companies have to offer to extend group benefits. The subsidy will not apply to workers of smaller companies that do not fall under COBRA laws.

Should You Take COBRA or Individual Health Insurance?

Some people may find that COBRA group coverage is the right choice. Those with health conditions or with a pregnant family member should probably try to stay with their group plan if possible. But younger and healthier families, with no expectation of a pregnancy, may save money with private medical plans! Individual medical plans will offer their best rates to younger and healthier people.

Do be aware that normal pregnancies are not covered by many individual health insurance plans though. Of course, a period of unemployment may not be the best time to have a baby, but things do happen.

Available private health insurance policies will vary by local area, but consumers can try an online health insurance quote form, call an insurance agent, or find an insurance company. Internet health insurance quotes can be a great way to compare the prices and plans you may qualify for. They can also put you in touch with a qualified local health insurance agent who wants to compete for your business, and will certainly consult with you for free.