United Hospital Fund Spells Out How the New COBRA Subsidy Extension Provides Important Relief to New Yorkers
Six Months More Coverage Support; Two Months More of an Eligibility Window
With new legislation extending the federal COBRA premium subsidy program—which pays 65 percent of the COBRA premiums for laid-off workers and which had been scheduled to lapse on December 31—the United Hospital Fund notes that this extension provides relief in three important ways:
- The original nine-month subsidy period in the federal American Recovery and Reinvestment Act (for laid-off workers who maintain employer-sponsored coverage under federal COBRA and state continuation laws) has been extended to 15 months. This means that workers who enrolled in the program when it began in March 2009—and all subsequent enrollees—are now entitled to 15 months of premium subsidies, instead of nine months.
- Most immediately, special transition rules grant new rights for two categories of employees who were caught up in the expiration. First, those employees who allowed their COBRA coverage to lapse because they lost subsidies as of November 30, 2009, will have a new right to reenroll in COBRA and take advantage of the ongoing premium subsidy by making retroactive payments towards the premium owed, based on their former 35 percent payment. Second, employees who paid the full premium for COBRA coverage after their subsidy lapsed will be entitled to a refund or credit that reflects the subsidy. Affected workers are entitled to notice of these new rights and have until February 17, 2010, or 30 days after they receive the notice—whichever is later—to exercise their rights to extend the subsidy period or reenroll in COBRA.
- Congress also approved a two-month extension of the eligibility period for program participation, which previously applied only to those who enrolled in COBRA prior to January 1, 2010, as a result of job loss. Now, anyone who becomes COBRA-eligible as a result of job loss prior to February 28, 2010, may obtain the subsidy, even if their COBRA enrollment occurs after that date. Since COBRA enrollment often lags behind job loss, this extension also provides subsidy eligibility to those who lost their jobs in November or December, but were not yet enrolled in COBRA by January 2010.
“This will be welcome news to many New Yorkers who have been struggling with the decision to risk going without insurance coverage because of the loss of this important subsidy,” says Peter Newell, co-director of the United Hospital Fund’s Health Insurance Project. “Taken together, these changes are intended to effect a seamless extension of COBRA subsidies from nine to 15 months and to include people who continue to lose jobs up through the end of February.”
New Coverage Options
For those who are not eligible for COBRA, the 2009 free consumer guide prepared by the United Hospital Fund—Hard Times and Health Insurance: Staying Covered When You Lose Your Job—includes a review of other coverage options. In addition to the options published in this guide, New York State enacted new legislation in 2009 that includes two more:
- Unmarried children up to age 29 are now eligible for coverage under fully insured group policies maintained by a parent. Employers may permit children to enroll at a family member rate, but otherwise these children can enroll at the full adult rate. Information on this new program is available at http://www.ins.state.ny.us/health/S6030_Age29.htm.
- Individuals and families who face the loss of COBRA coverage after 18 months may be eligible to extend their COBRA benefit under fully insured group plans for another 18 months as a result of a new state law. Information is available at http://www.ins.state.ny.us/cobra/cobra_ext_36.htm.
Written by Mr. Newell and Mark Scherzer, Esq., an attorney in private practice and the legislative counsel to New Yorkers for Accessible Health Coverage, Hard Times and Health Insurance: Staying Covered When You Lose Your Job is available from the Fund’s website. The Fund will post updates related to the new COBRA provisions on this Web page as they become available.
Support for this guide was provided by the New York State Health Foundation, whose mission is to expand health insurance coverage, increase access to high-quality health care services, and improve public and community health.
About the United Hospital Fund: The United Hospital Fund is a health services research and philanthropic organization whose mission is to shape positive change in health care for the people of New York.