New COBRA Subsidy & Other Healthcare For Unemployed
Massachusetts will combine federal stimulus money with an existing state assistance program so that thousands of unemployed residents will be able to get health insurance at a small fraction of the usual cost, state officials are expected to announce today. A program called COBRA has long allowed people to keep their employer-provided health coverage when they lose their jobs, but without the employer picking up part of the tab, many workers were unable to pay the premiums. To make insurance more affordable for the unemployed, the federal stimulus package signed into law last month pays nearly two-thirds of the cost of health insurance for nine months.
Massachusetts already has its own program to help cover COBRA costs for low- and some middle-income unemployed people. Now Massachusetts will combine its program with the federal initiative, using state money to offset the remaining one-third of a family's premium costs not covered by the federal benefit. The net effect is that the COBRA benefits will be stretched farther. Payments for families earning no more than $84,000 will be as low as $70 a month for family insurance plans that begin at $1,000. ($350 a month in advance, with $280 of that reimbursed later).
With the move, Massachusetts continues as one of the most generous states in providing health insurance assistance to laid-off workers. "We think this is going to be a tremendous benefit to unemployed folks who had a health plan subject to COBRA," said Suzanne M. Bump, state secretary of Labor and Workforce Development. "Even under the Medical Security Program there were a lot of folks who still couldn't exercise their COBRA options. This can really help bridge the gap."
The 20-year-old Medical Security Program - funded by a tax on employers - is a separate program that helps unemployed people whose income does not exceed $84,000, or 400 percent of the federal poverty limit of $21,000 for a family of four. As of January, 17,803 workers and family members get their health insurance this way, nearly double the number in January 2008.
Eligibility
The subsidy would apply to those who have lost their jobs through no fault of their own between Sept. 1, 2008, and Dec. 31, 2009. Massachusetts offers the Medical Security Plan (MSP) for the unemployed with incomes less than 400% FPL. There are two options available under MSP: (1) direct coverage, where MSP pays the entire costs of health care; and (2) premium assistance, in which MSP reimburses claimants for up to 80% of their health insurance continuation costs, which are usually COBRA premiums. If eligible for the new federal COBRA benefit, therefore, one must take the premium assistance option unless he/she can prove a “hardship”. A claimant is presumed to have a hardship if his or her family income is below 200% of the federal poverty limit. In other words, with the new COBRA subsidy, if one has income below 200% FPL, they automatically can take MSP direct coverage instead. One whose family income is between 200% and 400% of the poverty limit may be determined to have a hardship if his or her income is insufficient to pay the COBRA premium along with other living expenses.
Benefits
The subsidy covers 65% of the costs of COBRA health insurance premiums for up to nine months.
It comes with some income limitations: Benefits begin to decrease for individuals starting when their income hits $125,000 a year, and for couples when their income reaches $250,000. The benefits are not available for individuals with incomes over $145,000 and couples with income over $290,000.
The benefit is not retroactive, but it does reopen the 60-day window for selecting COBRA coverage. Employers will be required to send letters offering COBRA again to laid-off workers who may have declined it, dating back to September. People on COBRA will also be notified by their former employers.
Health Coverage For Unemployed Section Now on Website
We have added a section on health insurance coverage for the unemployed on our Employment/Unemployment page. It includes a version of this article as a patient handout- see COBRA Subsidy Factsheet.
Also there you will find a Health Care Coverage for the Unemployed Flowchart created by Partners Community Benefits (thanks to Pragya Rizal and Kim Simonian).
For More Information
For questions about the federal COBRA premium benefit: contact the U.S. Department of Labor’s Employee Benefits Security Administration at 1-866-444-3272 or www.dol.gov/COBRA.
For questions about the Medical Security Plan, call the plan directly at 1-800-908-8801, or visit www.mass.gov/dua/msp.
-From: “Boost to health coverage planned: State seeks to assist ranks of unemployed” By Elizabeth Cooney, The Boston Globe, March 9, 2009 at http://www.boston.com/news/local/massachusetts/articles/2009/03/09/boost_to_health_coverage_planned/ retrieved 3/9/09; and “New Federal Subsidy for COBRA Premiums: Questions, Answers and Links” at www.mass.gov/eolwd/cobra retrieved 3/13/09.
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