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Integrated Recovery Guide - Health: COBRA Continuation Coverage Print Share

COBRA Continuation Coverage
$24.7 billion was included for COBRA Continuation Coverage.

Office: Group Health Plan

Agency: Department of Labor (Regulatory)

Type: Mandatory Spending

Purpose: To provide individuals and their families who lost coverage due to a change in employment, with a premium subsidy of 65 percent of the COBRA continuation premiums for a maximum of 9 months of coverage only with respect to involuntary terminations that occurs on or after September 1, 2008, and before January 1, 2010.  The full premium subsidy is limited by a taxpayer's adjusted gross income (AGI), $125,000 for individuals and $250,000 for joint filers and is phased out for individuals with an AGI between $125,000 and $145,000 and families with an AGI between $250,000 and $290,000.  It provides a special 60-day election period for a qualified beneficiary who is eligible for a subsidized premium and who has not elected COBRA continuation coverage as of the date of enactment or who is no longer enrolled on the date of enactment, for example, because the beneficiary was unable to continue paying the premium.

Note—Individuals need not apply for this subsidy prospectively.  Beginning March 1st, qualified recipients who elect COBRA coverage should see the subsidy reflected in their monthly COBRA bill.  The subsidy will be available for the next nine months, but is only available to individuals (1) who involuntarily lost their jobs, (2) whose AGI meets the requirements described above as determined on their federal 2009 or 2010 income tax submissions, and (3) who have not been offered insurance from a subsequent employer. In addition, partial subsidy recipients will receive the full COBRA subsidy and are then required to reconcile the difference between the full subsidy and partial on their 2009 or 2010 tax return (whichever year(s) the subsidy is received). Similarly, individuals that receive the subsidy but whose income exceeds AGI thresholds described above are required to repay the value of their subsidy on their 2009 or 2010 tax return.

Description: Recession-related job loss threatens health coverage for many families.  This provision is intended to provide targeted assistance to individuals and families who have been involuntarily terminated to enable them to afford premium payments for health insurance coverage under COBRA.  The Joint Committee on Taxation estimates that this provision would help 7 million people maintain their health insurance by providing a vital bridge for workers who have been forced out of their jobs in this recession.

Website: http://www.dol.gov/dol/topic/health-plans/cobra.htm
http://www.irs.gov/newsroom/article/0,,id=204505,00.html

Phone: 1-866-4-USA-DOL