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COBRA Continuation Premium Subsidy
Due to the high cost of COBRA insurance, a question we hear often is about whether or not there is a COBRA insurance subsidy. The short answer is - No. There was a COBRA subsidy that paid for 65% of the expense of COBRA for 2 years in 2008 but it has since ended and no new legislation has been passed to create a new subsidy for people on COBRA. Currently there are no subsidies available, although some employers will subsidize the cost of COBRA as part of a severance package depending on how you left your job.
History of COBRA Insurance Subsidy
In September of 2008 as part of the American Recovery Act, the government passed legislation that subsidizes COBRA costs until March of 2010. Under this Recovery Act and COBRA subsidy, workers only had to pay 35% of the cost of COBRA, meaning that the government paid 65% of the cost. The subsidy was only available to people who involuntarily lost their jobs and for people who were under a certain yearly income. It was also available to people who lost their health insurance plans due to a reduction in hours. Additionally the subsidy legislation, the act also extended COBRA benefits to people beyond the typical 18-month period. Unfortunately the COBRA subsidy no longer is in place and cannot be used to reduce COBRA expenses.
How Can I Reduce My Costs Without the Subsidy?
Since the subsidy is no longer in effect, many people want to know how they can reduce their COBRA expenses, since for most COBRA is simply too expensive to maintain for more than a couple of months. There are some ways to reduce your cost and reduce your health insurance costs.
- Determine Who Really Needs COBRA: One of the best ways to reduce your COBRA costs is to look closely at who, if anyone, truly needs COBRA coverage. COBRA coverage is best for people with preexisting conditions or serious medical needs who either do not qualify for private coverage, or only qualify at a very high premium. Under the COBRA law you can choose who enrolls in COBRA and who does not. Only enroll those people in your family on COBRA who truly need it and find a less expensive option for the remaining family members.
- Look At Private Plans: Private health insurance plans can actually provide a large cost savings to most healthy people. Private plans offer savings of up to 65% in most cases and can offer the same level of coverage. There are also catastrophic and high deductible plans for people looking for minimal coverage. You can explore your private insurance options by getting a health insurance quote below to see what is available in your area and what you qualify for.
- Consider Government Options: If you income is below a certain level, you may qualify for government sponsored health insurance plans like CHIPs for children and Medicaid. If you qualify for these plans you can find insurance that is very affordable, not more than 5% of your income, or is even free.
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