COBRA Health Insurance Benefits

COBRA Health Insurance Benefits - 2/27/09

Kim: On last week's show we talked about the new health insurance law where the government pays 65% of the health insurance premium of an unemployed worker for up to 9 months. We received more questions about this new law. Here to discuss the complicated rules regarding health insurance premiums and the government subsidy is attorney Michael Solomon.

Kim: A viewer asked the following question. Her husband lost his job, can she and her husband elect to continue the health insurance plan as individuals and both receive the government subsidy? Apparently, it is cheaper for her and her husband to each have single coverage though the employer than family coverage.

Mike: I think, before I answer the question directly, I'll give a quick overview of the rules for health insurance after you lose your job. There is a federal law called COBRA that gives former employees certain rights if they lose their jobs and work for an employer with at least 20 employees;

Continued Health Insurance Coverage. If you are fired from your job, you have the right to continue on your employer's group health insurance coverage for at least 18 months unless you are fired for gross misconduct.

Family Coverage. Not only is the ex-employee qualified for this coverage, but also the spouse or children if they were already covered before the employee was fired. Also, if a spouse gets a divorce or a child gets kicked off of the plan because they are too old, they can qualify for continued coverage.

Subsidy. Under the new law, if an employee loses his job anytime from September 1, 2008 through the end of 2009, the government will pay 65% of the premium for up to 9 months. After that, the employee must pay up to 102% of the normal premium.

Now, let my try to answer the viewer's question. It appears that if the employee loses his job, the subsidy will apply to all family members coverage. I believe that means that the viewer can elect separate coverage and each receive the subsidy. There has been no government guidance yet on the new law. However, the Department of Labor will issue an explanation within one month.

Kim: What happens if someone loses their job and dies before receiving the subsidy? Is the surviving spouse out of luck?

Mike: No. The law is clear on this. If the employee loses his job, elects the Cobra coverage and then dies, the surviving spouse continues to receive the subsidy for the remainder of the 9 months.

Kim: Thanks again for trying to explain this new, difficult, but important benefit. If you have any more questions for Michael, e-mail us at, and he will try to answer your questions next week.