The American Recovery and Reinvestment Act of 2009 (ARRA) includes opportunities for premium reductions and extended coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA), but do you know whether or not you qualify… or how to obtain these benefits?

You qualify for premium reduction if your (or a family member’s) involuntary termination from employment occurred between September 1, 2008 and December 31, 2009. Eligible individuals will pay only 35 percent of the full COBRA premiums under their plans for up to nine months, and the rest will be reimbursed to the coverage provider in the form of a tax credit.

If you were offered, but declined COBRA coverage between September 1, 2008 and February 16, 2009, or if you elected COBRA but since discontinued coverage because you couldn’t afford the premiums, you may have another opportunity to opt-in to COBRA and pay reduced premiums.

You are NOT eligible for COBRA or the premium reduction if you are eligible for group health coverage under a new employer’s plan, your spouse’s plan, or Medicare.

As you might imagine, it’s not all as simple as all that — the premium reduction will disqualify you for the Health Coverage Tax Credit — which in some cases, will be worth more. Also, for high-income ($125,000 +) households this may increase your tax liability. It may be worth a phone call to a qualified tax-preparer. The IRS also has a page for information relating to the American Recovery and Reinvestment Act of 2009.

How do you get these benefits? Your plan administrator is obligated to inform you of your eligibility and provide you with the necessary paperwork. 

This comes as a welcome relief to those who qualify, but it is only a temporary solution to a much larger problem. 

If your COBRA period ran its course prior to September of 2008, and you’ve already fallen through the cracks, you’re out of luck.

Enacted in 1985, COBRA itself is woefully inadequate for our times and priced out-of-reach for most families struggling with unemployment. The staggering annual increases in health insurance premiums, plus the dwindling numbers of employers who offer health coverage have thrown millions of people into ranks of the uninsured. The individual market is not kind to those with pre-existing conditions.

The Obama administration and members of Congress have promised major health care reform beginning this year. We’re rapidly approaching the half-way mark…

Additional Information:

The United States Department of Labor: 

COBRA Continuation Coverage Assistance Under The American Recovery And Reinvestment Act

COBRA  Premium Reduction FAQ