The American Recovery and Reinvestment Act of 2009 (HR 1) includes subsidies for health insurance for people who recently lost their jobs. Those eligible will only have to pay 35 percent of the cost of health insurance under COBRA. The subsidy will last for 9 months. People who have missed the 60 day period to elect COBRA will be given another 60 days from the date the bill is enacted to elect COBRA with the lower premium.
Title III of HR 1, entitled “Health Insurance Assistance for the Unemployed Act of 2009” specifies the criteria one must meet in order to qualify for the health insurance subsidy. To qualify a worker must have:
1) Worked for an employer with 20 or more employees which must comply with COBRA;
2) Been “involuntarily terminated” between September 1, 2008 and December 31, 2009;
3) Attested that their same year income will not exceed $125,000 for individuals or $250,000 for families; and,
4) Not been able to enroll in Medicare or another employer’s health insurance plans.
Additionally, the legislation gives states the opportunity to expand health insurance coverage to individuals who previously worked at companies which do not have to comply with COBRA (e.g., under 20 employees.)
The U.S. Department of Labor will develop model notices for employers to assist with compliance.
Preliminary discussions had been that employers would obtain credit from employer paid FICA taxes to offset the 65 percent subsidy of the COBRA health insurance premium. The specifics on how the subsidy would reimburse employers has not been released.
If the subsidy takes money from the Medicare Hospital Insurance Trust Fund, that would be tragic. The 2008 projection is that the Medicare Hospital Insurance Trust Fund will be insolvent by 2019. Add the aging baby boomers retiring; fewer work age employees paying into the system; ever-escalating costs for medical care; and you have a recipe for the insolvency of Medicare. Let’s hope that our elected representatives do something to fix this fast approaching problem.
