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Qualifying for reductions in your COBRA premiums

E-mail|Link Posted by Andrew Chan June 11, 2009 02:00 PM

I was laid off last week and want to elect COBRA coverage for health insurance at the reduced premium. However, I am eligible to apply for coverage through my husband’s employer plan. Can I still sign up for COBRA at the reduced rate?

Unfortunately, you do not qualify for COBRA coverage at the reduce premiums because you are eligible to receive insurance coverage through your husband’s plan. Under the American Recovery and Reinvestment Act (ARRA) passed earlier this year, individuals who are eligible for insurance coverage through another group plan such as a spouse’s employer’s plan or Medicare, are not eligible for the reduced premium coverage under COBRA.

Those who are eligible for the reduction of COBRA premiums under the ARRA are known as “assistance eligible individuals” (AEI). According to the Department of Labor, an AEI is defined as an individual who:

* Is eligible for COBRA continuation coverage at any time during the period from September 1, 2008 through December 31, 2009 because of an involuntary termination of employment (that occurred at some time from September 1, 2008 through December 31, 2009);

* Elects COBRA coverage when first offered or during the additional election period provided by ARRA; and

* Is not eligible for other group health coverage (including a new employer’s plan, a spouse’s plan or Medicare).

Also, if your annual income is more than $125,000 dollars (or $250,000 dollars for couples filing jointly on your federal return) you may need to repay some or all of the premium reduction.

For more information about this COBRA subsidy please click on the links below to read our other blog postings on this topic and to visit the Department of Labor’s web site.

http://www.boston.com/business/personalfinance/managingyourmoney/archives/2009/03/just_laid_off_g_1.html

http://www.boston.com/business/personalfinance/managingyourmoney/archives/2009/03/more_cobra_subs_1.html

http://edlabor.house.gov/blog/2009/02/health-coverage-for-the-unempl.shtml

tags COBRA, health insurance

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Local finance professionals share insights and advice on issues such as budgeting, managing debt, and retirement planning.

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About the contributors

Jill Boynton is co-founder of Cornerstone Financial Planning in Newington, N.H. Along with traditional financial planning services, Boynton provides analysis specifically for divorce.

Andrew Chan is the founder of Integrative Financial Advisors in Framingham. He provides comprehensive financial planning advice and investment management services. He has been an adviser for over 12 years and works with clients to integrate all aspects of their finances including investments, retirement, education funding, and tax planning.

Cheryl Costa is a managing director at AFW Wealth Advisors, which has offices in Natick and Purchase, N.Y. She advises clients on investing, education funding, and estate planning. She holds a master’s in business administration from Boston University.

Jamie Downey has been an accountant for more than 14 years. He's a partner at Downey & Co. in Braintree. Prior to joining the firm, he served as a manager in the audit department of accounting firm KPMG.