Stimulus package makes COBRA your new best friend

The stimulus package just gave COBRA a crane kick to the head

The stimulus package just gave COBRA a crane kick to the head.

COBRA might now be the unemployed person’s best friend (sorry, dog and PS3). People generally associate it with losing their jobs (through no fault of their own) and paying a lot of money (they don’t have) each month for health insurance that they’d rather not use. Who wants to lose their job and pay full price for something they once got for free or at a discount? But COBRA can also save people from financial ruin and maybe death, or at least give peace of mind in a stressful time. That’s more than I can say for some friends. Hell, that might even be enough to crack the top 5 on speed-dial.

Our friend COBRA’s God (Congress)-given name is Consolidated Omnibus Budget Reconciliation Act of 1985, but he prefers the shortened version. And who can blame him? I wouldn’t want to answer to that either. (How totally embarrassing!) His purpose, according to the U.S. Department of Labor, is to give…

…workers and their families who lose their health benefits the right to choose to continue group health benefits provided by their group health plan for limited periods of time under certain circumstances such as voluntary or involuntary job loss, reduction in the hours worked, transition between jobs, death, divorce, and other life events. Qualified individuals may be required to pay the entire premium for coverage up to 102 percent of the cost to the plan.

Companies with at least 20 employees must offer this option to former employees. Availing oneself of COBRA’s services is pretty easy. Both times I used him (it was just innocent fun, I don’t regret it), my former employer provided the enrollment form upon termination. I filled out and submitted it, and then mailed my employer a check each month. That was that.

COBRA has had some problems and isn’t always such a great friend. While continuing coverage is easy, paying for it isn’t. Health coverage from my last job through COBRA would have cost me about $450/month, and it wasn’t even that good. The cost for families is a lot more. (Sorry you lost your wallet, Mr. or Ms. Former Employee, but thanks for picking up the tab.) There are cheaper policies out there, and monthly health care payments of any kind are still preferable to thousands in hospital costs. But food and shelter trump insurance. To put it in basic terms, I may suffer without health insurance, I will suffer without the basics of life.

Here comes COBRA’s new girlfriend – The American Recovery and Reinvestment Tax Act of 2009 – to the rescue. You may know her as “Stimi,” “SP” or “Stimulus Package.” That last name led to some awkward moments when hanging out with certain anxious Congressmen. She prefers to go by TARARTAOT anyway. (I think she’s from France originally, or someplace else weird and foreign.) TARARTAOT makes COBRA clean up his act and play nice with unemployed people. She seems to be good for him.

Here’s how she rolls…

  • Because of TARARTAOT, the government pays 65% of COBRA’s premiums for up to 9 months, effective March 1, 2009.
  • Her subsidy is available to workers involuntarily terminated (for reasons other than gross misconduct) between September 1, 2008 and December 31, 2009 and eligible for COBRA.
  • She makes the employer pay the 65% on the employee’s behalf before government reimbursement.
  • She requires employers to notify all former employees affected within 60 days and give them another chance to at COBRA. Those employees then get 60 days to elect coverage.

Though TARARTAOT isn’t perfect, her shortcomings are minor…

  • She makes the employee pay 35% of COBRA before the employer can request the 65% reimbursement.
  • Her subsidy is not retroactive.
  • Her subsidy is phased out for taxpayers with an adjusted gross income of more than $125,000 ($250,000 if married).

I can see this relationship blossoming into something beautiful. We’ll have to wait and see. Maybe TARARTAOT can even convince COBRA to change his name and leave behind that bad-boy image. If Philip Morris can go by Altria Group – burying some of the negative associations that come with killing people and reemerging to seem almost good (“altruism,” anyone) – then surely COBRA can soften his edges a little. Stay tuned…

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5 Comments

  1. Tina wrote:

    I’m not into threesomes, but I can’t wait to roll with this new couple!

    Wednesday, March 4, 2009 at 9:13 am | Permalink
  2. Troy wrote:

    Millions of Americans who lost their jobs prior to September 1, 2008 could not afford Cobra. Millions more elected Cobra but have now depleted their resources and can not continue on. Still millions more with pre-existing conditions who rely on cobra to bridge the 18 month gap between their former employers insurance and their state’s high risk insurance pools are struggling to pay their premiums every month to prevent being locked out of insurance permanently.

    Please join us in asking Congress and the Obama administration to eliminate the arbitrary September 1, 2008 cut-off date and 9 month limitation of assistance by signing our petition at http://www.ipetitions.com/petition/cobrareform and telling your friends about our efforts.

    For more information please see our website at http://cobrareform.weebly.com.

    Wednesday, March 4, 2009 at 8:21 pm | Permalink
  3. Norm wrote:

    I’ll let you decide if you want to sign their petition. Maybe afterward, you can even get them to proofread their website.

    Wednesday, March 4, 2009 at 8:44 pm | Permalink
  4. Unemployed 2 wrote:

    Google petitions… ive heard they dont remedy much except give the person that feel good feeling like they have accomplished something…

    Thursday, March 12, 2009 at 10:29 pm | Permalink
  5. Ellen Burbine wrote:

    Please does anyone have any information whether the Cobra Stimulus will be extended into 2010! As I’m anxiously waiting to hear what I’ll be doing for medical in Jan.2010. Please resond!

    Friday, November 6, 2009 at 6:06 pm | Permalink

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