Cobra Update

Monday, January 11th, 2010 by Charles Mayfield, CFP®



The American Recovery and Reinvestment Act was amended on December 19th, 2009 (ARRA).  The ARRA has a provision that allows for the reimbursement of 65% of the premiums attributable the extension of health benefits for involuntarily terminated employees seeking to extend their coverage under Cobra.  Prior eligibility requirements allowed for this reimbursement if you were terminated between September 1st, 2008 and January 1st, 2010.  These changes also apply to Georgia state continuation of benefits (if your employer is not Cobra eligible).

 This eligibility period has been extended through to February 28th, 2010.  Additionally, the reimbursement period has been extended from 9 to up to 15 months.  If you are currently participating in the Cobra Subsidy program, this is a tremendous change for you.  There are an additional 6 months worth of reimbursements that you are eligible for.

Please be sure and know your options for Cobra Continuation in the event you are involuntarily terminated.  Some things to consider when looking into Cobra:

  • 1. You have a 60 day grace period to elect to continue coverage
    • a. If you elect, you will owe the premiums back to your termination date
  • 2. You don’t have to take Cobra…weigh your options
    • a. If you’re not happy with your current plan…see #3.
  • 3. Explore alternatives. You have a 60-Day grace period to shop coverage.
    • a. Be sure to consider if you’re eligibility for the ARRA reimbursement. The 65% savings could make the Cobra Continuation a much more attractive alternative.
    • b. Georgia is a “non-guarantee” issue state, meaning the insurance company doesn’t have to approve you for health insurance if you aren’t healthy.
  • 4. You can only extend Cobra for 18 months.
    • a. There are special provisions that may allow for you to extend your coverage for up to 36 total months.
  • 5. Call a knowledgeable Advisor
    • a. There are dozens of plan options out there.
    • b. You will need to consider deductibles, co-pays, etc.

Hopefully this post doesn’t apply to you.  However, if you or someone you know has recently lost their job, there is much to consider.  Don’t make an uninformed decision or wait too long to act.

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