No COBRA subsidy in Senate-passed unemployment benefits bill

Jul 23 2010

"U.S. workers who lost their jobs as of June 1 won't be eligible for a 65 percent federal subsidy to help pay for health insurance under an unemployment bill the Senate approved yesterday," Bloomberg reports. That provision and other assistance programs were stripped from the jobless bill because of concerns about how to pay for them.

Those laid off after June 1 aren't eligible for the subsidy, called the COBRA subsidy, since it "expired May 31, meaning workers who lost their jobs after that date don't qualify. Those already receiving the benefit may continue to pay reduced premiums for up to 15 months, according to the Department of Labor." The money for the program was first authorized using stimulus dollars in February 2009. Without the subsidy, the laid-off who wish to keep the health insurance their former employer offered must pay the entire cost of the premium, which is often cost-prohibitive. (Collins, 7/22).

AARP Bulletin: Meanwhile, older people are often feeling the pinch of a Medicare/COBRA rule that "is little understood by Medicare beneficiaries, employers, health insurance companies and even some Social Security and Medicare officials."

"Under current law, working Americans with employer health coverage can postpone signing up for Medicare until after 65. When they retire, accept a buyout or are laid off, they then get an eight-month special enrollment period to sign up for Medicare Part B (which covers doctors visits and other outpatient services) immediately and without penalty. But many people in these circumstances are able to extend their employer coverage for a year or two under a 1986 law known as COBRA. ... What they may not realize is that waiting until their COBRA coverage expires to enroll in Part B disqualifies them from the eight-month grace period." They then must pay a permanent penalty on their Part B premiums. The issue has confused many, and the Medicare Rights Center says more than 21 percent of the calls it receives are about the issue (Barry, 7/22).