If you were recently laid off or fired and you are considering whether to enroll in COBRA you’re in luck. On February 17th, President Obama signed the American Recovery and Reinvestment Act of 2009 (HR 1) which mandates that employers pay 65% of the COBRA premium for “involuntarily terminated” employees. This new, temporary law applies to people involuntarily terminated from their jobs between September 1, 2008 and December 31, 2009. The subsidy will last 9 months.

In order to qualify you can’t make more than $125,000 this year for an individual and $250,000 for a family. You also can’t be eligible to enroll in another employer’s group health plan or in Medicare. Here is a bit more detailed info on the COBRA subsidy.

Your former employer has until April 17th to send you a notice that you are eligible for the subsidy. You must return the notice and “elect” to receive the subsidy in order to get it. If you are eligible for the subsidy and you were given a COBRA notice and did not “elect” to enroll (say you were laid off in September of 2008 and the 60 COBRA election period expired) don’t worry. You will be given another 60 day period to enroll in COBRA and request the 65% subsidy. This will be explained in the COBRA notice that you will receive from your former employer (or their COBRA administrator.)

The U.S. Department of Labor (DOL) sets policy on COBRA. Here is there specific COBRA information for workers and their families. You may also find the “COBRA Premium Reduction Fact Sheet” helpful.

At this time, March 2, 2009, very little information is available so it is understandable that your former employer has not contacted you: they don’t really know what to say. Hopefully DOL will create a notice that employers can use. Also, the IRS is writing guidelines for employers to get reimbursed for their COBRA premium subsidy by receiving a credit on payroll taxes paid for active employees.

You may want to contact the HR people at your former employer and/or the company that administers COBRA for them. (The name and number should be on any COBRA notice that you have already received.) Ask them when you can expect to receive the “COBRA premium subsidy election form.” Even with the subsidy, COBRA may be prohibitively expensive, but you should find out the cost. If you are interested in obtaining an individual or family health insurance plan, we at BenefitsCafe.com would love to help you. There is no additional charge for our services. We quote all of the health insurance plans available in California. We have a passion for this stuff and hopefully we can help.