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The government will pay laid-off workers to maintain their employer-sponsored health insurance through September, thanks to a provision in the $ 1.9 trillion stimulus package signed by President Joe Biden Thursday.
Under the Aid Act, the government will subsidize COBRA bonuses for former employees of a company until the fall. COBRA, or the Consolidated Omnibus Budget Reconciliation Act, allows individuals who leave a company of 20 or more employees to pay to stay on their employment insurance plan for 18 months.
However, the option is usually prohibitively expensive.
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How many Americans will benefit remains unclear.
This is because, in order to stick to their work schedule, a laid-off worker will typically continue to pay their monthly bonuses as well as their employer’s usual contribution and an additional 2% administration fee.
The typical annual premium for work-related coverage in 2020 was $ 7,470 for individuals and $ 21,342 for family coverage, according to the Kaiser Family Foundation.
Now the government will fully cover these expensive premiums for the next seven months. COBRA subsidies have been granted before, including during the Great Recession and in 2002, to people who lost their jobs due to international trade disputes.
According to a census, around 130,000 unemployed adults of working age were insured through COBRA in 2017. But that was of course before the pandemic shot up unemployment. And again, many people don’t choose coverage because of the cost.
With the grant, “potentially dramatically more people will sign up,” said Caitlin Donovan, a spokeswoman for the National Patient Advocate Foundation.
Here’s what you need to know.
Who is eligible for the grant?
You would be eligible if you involuntarily quit a job that offers health insurance and you don’t qualify for another employer plan or Medicare, Donovan said.
“You would even qualify if you turned down COBRA beforehand,” Donovan said. All family members on your plan would also be fully insured.
You should receive written notification of your eligibility, likely from your employer or your health insurance company. If you haven’t heard, contact your former insurer.
How does the grant change my costs?
How long does the subsidy last?
The subsidy is expected to begin in early April and run through September 30, 2021.
Typically, you can’t be with COBRA for more than 18 months, so some people may be cut off earlier than this point depending on when they started reporting.
What if I have already declined COBRA coverage?
Do not worry. It is not too late for you to take advantage of this relief.
Dismissed employees must generally register with COBRA within 60 days of the end of their employment relationship. But even if, for example, you turned down coverage in August 2020 because the premiums were too high, you can now re-enroll and enroll, according to the Health Policy Institute at Georgetown University.
However, once you receive notification of your eligibility for COBRA, you must register within 60 days.
Do I have to pay for months if I was not insured with COBRA?
If you do not sign up for COBRA right away and do so later, you will usually have to repay the premiums as you are not allowed to have a coverage gap.
The relief bill temporarily changes this policy.
According to the experts at Georgetown, you would not have to repay the awards by the date you were originally eligible to register with COBRA.
However, you are only insured for claims from your registration date.
When does reporting by COBRA make sense?
The main downside to COBRA is usually the cost of laid-off workers. The relief calculation removes this hurdle.
One of the main benefits is that you can keep your current doctors and health care providers. If you’ve already met your deductible for the year, COBRA could be even cheaper compared to other plans, experts say.
Other insurance options for the unemployed include Medicaid and purchasing a plan on the Affordable Care Act market.
Medicaid can be useful if you expect your financial problems to persist and you will not receive monthly rewards either.
In the meantime, some unemployed Americans may qualify for a free marketplace plan on the ACA or Obamacare exchanges. Not only do you not have to pay a premium, but your out-of-pocket expenses can also be minimal.
“As a result, a marketplace plan may be a better deal for you,” said Edwin Park, research professor at Georgetown University’s McCourt School of Public Policy.