COBRA Coverage Under the Stimulus Package

March 08,2016
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Good news from the Stimulus Package for people who elected to continue COBRA coverage after losing their jobs! Among the benefits offered under the American Recovery and Reinvestment Act of 2009–also known as the Stimulus Package–are new changes to the COBRA benefits.

Individuals who were involuntarily terminated on or after September 1, 2008 and before January 1, 2010, who elected to continue health care coverage under COBRA, are provided a subsidy equal to 65% of the premium for COBRA payments for a period of coverage for up to 9 months.

Even those who are eligible for the subsidy who did not elect COBRA as of the date of enactment of the law may elect COBRA from February 17, 2009 until 60 days after receiving notice of this special election period. The provision also permits group health plans to provide a special enrollment right to eligible individuals, allowing them to change coverage options under the plan in conjunction with electing COBRA continuation coverage.

Please note, though, that if the premium subsidy is provided with respect to any COBRA continuation coverage which covers you, your spouse, or any of your dependents during a taxable year in which your modified adjusted gross income exceeds $145,000 ($290,000 for joint filers) then the amount of the premium subsidy for all months during the taxable year must be recaptured. The subsidy is repaid proportionately for individuals with adjusted gross income between $125,000 and $145,000 ($250,000 and $290,000 for joint filers).

What does all this mean for you? In plain terms, if you were terminated from your job for any reason, it won’t be as difficult to continue to pay for medical care necessary to treat a disabling condition. While this provision of the Stimulus Package does not specifically focus on individuals who have filed for Social Security Disability benefits, it is nevertheless great news for the millions of people who have been relying on a spouse’s or parent’s health insurance coverage to obtain medical care to treat disabling physical and mental conditions.

Gabe Hermann