Overview: Premium assistance

April 2009

The federal economic stimulus package provides nine months of subsidy to help pay monthly health insurance costs for certain employees who lose their jobs and qualify under state or federal law to continue their employer health insurance.

The federal COBRA law and state continuation law exist to help employees – and their families - keep insurance after certain events such as a job loss. The federal law applies to employers with 20 or more employees. State law covers employers with fewer than 20 employees and others “not subject to COBRA.”

Normally, terminated employees must pay the full costs to continue their insurance. With stimulus help, the employees’ share is 35 percent.

Employees who are eligible for the subsidy cannot be required to pay more than their 35 percent share of the premium.

Eligibility

How does the subsidy work?

How long does the subsidy last?

Health insurance features

How to get benefits

Appeals

Examples

Questions?

Eligibility

You are eligible if you:

Involuntarily lose your job from Sept. 1, 2008, through Dec. 31, 2009, and

qualify under federal COBRA law or Oregon's state continuation law to continue your employer health plan, even if you turned this down once or started and your  continuation coverage ended for any reason and

have an employer who remains in business and still offers insurance, and

have a modified adjusted gross income of less than $125,000 ($250,000 for joint filers). Individuals with more income can claim the subsidy but will have to repay part or all of the money through an increase in income tax liability for the year.

do not have other group coverage available (for example, through a spouse)

are not eligible for Medicare

How does the subsidy work?

·        Eligible individuals pay 35 percent of monthly premium costs.

·        If you work for a larger employer (20 or more employees), the employer will pay 65 percent of the monthly premium and claim reimbursement from the federal government as a credit against payroll taxes.

·        If you work for a smaller employer (19 or fewer employees), the insurance company will pay the 65 percent and claim the tax credit.

How long does the subsidy last?

·        Nine months or

·        until you are eligible for any other group health plan (including insurance from a spouse’s employer) or Medicare.

You must notify your former employer, insurance company or plan administrator if you can get other coverage. If you don't, the IRS can require you to repay any ineligible subsidies plus a 10 percent penalty.

Health insurance features

·        The health insurance plan is the same plan you had with your employer.

·        Your former employer can let you select a plan that is different than the one you had when working although it can’t be a more expensive plan.

·        You won't have to wait to have existing medical conditions paid for by insurance if you previously met your pre-existing condition exclusion period.

·        Dental/vision insurance may qualify for the subsidy as part of your medical coverage.

How to get benefits

COBRA-eligible employees (business with 20 or more employees)

·        If you lost your job after August 31, 2008, you should have received forms to fill out. You may also ask your employer for the forms. The nine months of subsidy for most people who already lost their jobs starts March 1, 2009. (This is because the subsidy program was approved Feb. 17, 2009.)

·        If you lost your job after Feb. 16, 2009, your new coverage begins the date your old coverage ends.

·        You have 60 days (generally from the date on the notice) to return the forms.

·        You can decide which family members to keep insured

·        You will receive a premium credit or be reimbursed for 65 percent of any full insurance premiums you paid after the subsidy program began (Feb. 17, 2009).

State continuation employees (business has fewer than 20 employees)

·        If you lost your job after Aug. 31, 2008, your former insurance company will send you forms to fill out. You should receive these forms by June 1. You may also ask your former employer or insurance company for the forms. The nine months of subsidy for most people starts March 1, 2009. (This is because the subsidy program was approved Feb. 17, 2009.) This means that some people will owe more than one month’s premium by the time paperwork is completed.

·        If you lost your job after Feb. 16, 2009, your new coverage begins the date your old coverage ends.

·        You have 31 days from the day you receive the notice to return the forms to the insurance company.

·        You can decide which family members to keep insured

·        You will receive a premium credit or be reimbursed for 65 percent of any full insurance premiums you paid after the subsidy program began (Feb. 17, 2009).

Appeals

·        COBRA-eligible employees who believe they were improperly denied a subsidy can ask the U.S. Department of Labor for review. Information is available at: http://www.dol.gov/ebsa/subsidydenialreview.html

·        State continuation-eligible employees who believe they were improperly denied a subsidy should ask the U.S. Department of Health and Human Services for review. Send questions to: NewCobraRights@cms.hhs.gov Other information is available at: www.cms.hhs.gov/cobracontinuationofcov/

Examples

COBRA employee

For years, Susan's employer-based health insurance covered her, her husband and their child. She was laid off in December 2008. She received notice explaining that under federal COBRA law, she could continue her employer plan but she would have to pay the full costs - $1,000 every month. She couldn't afford this.

Now, with the stimulus help, she will get another notice giving her a second chance to continue her employer's health plan. This time, she will pay $350 monthly for her family's insurance and her employer will pay $650. Her coverage would be effective March 1 and her subsidy would continue through November, a total of nine months. Susan has asthma and her plan must cover this condition as soon as she resumes her insurance. If Susan finds the $350 is too steep, she can continue coverage for some members of her family but not for others.

Meanwhile, she is looking for a new job. If she finds a job and becomes eligible for the new employer's insurance before her nine months of stimulus help is up, she must immediately report that to her former employer.

    State continuation employees

Joe lost his job at a small business in January 2009. He paid the full $500 monthly premium in January and again in February to keep his employer health plan. Starting March 1, he was eligible for the 65 percent subsidy, meaning his insurance now costs $175 a month. Joe is able to keep his subsidy through November, a total of nine months since he first received a subsidy in March.

Sally lost her job at a small business in October 2008. She couldn’t afford her $250 monthly premium and didn’t continue her employer health insurance. Now, she gets a “second chance” – with a monthly bill of $87.50. Her subsidized coverage starts March 1, 2009, and continues for nine months.

Questions?

·        Oregon Insurance Division: Consumer advocates can be reached at 1-503-947-7984 or toll-free at 1-888-877-4894. You may also e-mail cp.ins@state.or.us

·        U.S. Department of Labor: http://www.dol.gov/ebsa/cobra.html

or call 1-866-444-3272

·        IRS: http://www.irs.gov/newsroom/article/0,,id=204505,00.html

·        U.S. Department of Health and Human Services: www.cms.hhs.gov/cobracontinuationofcov/