April 12th, 2010 – COBRA is a Federal Act that allows most employees of firms with 20 or more employees that were covered by an Employer Sponsored Health Insurance plan to continue those benefits, generally for up to 18 months after a separation of employment.
In Colorado, we also have State Continuation Benefits which offer nearly identical benefits (to COBRA) to Colorado companies with fewer than 20 employees.
Generally, you become eligible for COBRA Benefits or Colorado’s Continuation Benefits if you had voluntary or involuntary termination of employment or if your hours were cut to where you were no longer eligible for the employer sponsored group health insurance plan. There are other special situations, but these are the most common.
If you had an involuntary termination of employment between September 1st 2008 and March 31st, 2010 you may be eligible for a 65% premium subsidy for up to 15 months as part of the American Recovery and Reinvestment Act of 2009. That means that you would just pay 35% of the normal COBRA or Colorado State Continuation premium if you had an involuntary job loss (i.e. getting laid off or fired for reasons other than gross negligence) during that time frame.
The premium subsidy will last up to 15 months or until you are eligible for health benefits through another employer sponsored group plan, including a spouse’s plan. Please note that if the company closes or discontinues offering health insurance to employees then COBRA, State Continuation and any subsidies may not apply.
If the your modified adjusted gross income is more than $125,000 a year or $250,000 a year, if filing jointly then you may not be eligible for the full subsidy. If your modified adjusted gross income is more than $155,000 a year or $290,000 a year, if filing jointly then you may not be eligible for any subsidy. The subsidy is not considered income as long as the beneficiary meets the income tests.
The United States Department of Labor has a helpful FAQ Page to answer the most common questions about COBRA and the COBRA Premium Subsidies. If you wish to speak to them about your individual situation you can call the Department of Labor at 1.866.444.3272.