COBRA extension helps unemployed workers this year

Another COBRA extension helps unemployed workers without insurance. USA Today reports: "A defense spending bill signed into law Dec. 19 expands a subsidy for unemployed workers who want to continue their former employer's health insurance coverage. Under the federal law known as COBRA, workers who leave their jobs can continue their former employer's coverage for up to 18 months. Ordinarily, though, workers must pay the entire premium, making COBRA out of reach for most unemployed workers. The economic stimulus package enacted by Congress last year subsidized 65% of COBRA premiums for unemployed workers for up to nine months, starting in March 2009. But with unemployment still above 10% at year's end, Congress decided to extend and expand the benefit." The extension allows individuals to continue receiving the subsidy for another six months.

The subsidy has increased COBRA use significantly: "From March to November, the number of workers who signed up for COBRA increased 20 percentage points over the previous six-month period, when no subsidy was available, according to Hewitt Associates ... [the group] estimates that subsidized COBRA premiums cost the average worker $3,000 a year, vs. $8,800 a year without the subsidy."

Additionally, the COBRA extension is retroactive, therefore unemployed workers "who lost their subsidy before the legislation was enacted are still eligible for six more months of subsidized premiums, according to the Department of Labor. The government is providing a grace period for workers who let their coverage lapse, says Kathryn Bakich, senior vice president and head of the health care compliance practice at Segal Co. To resume subsidized COBRA, you must pay the back premiums at the reduced rate by Feb. 17, or 30 days after receiving a notice from your plan administrator, whichever is later" (Block, 1/5).