COBRA Insurance Benefits for Injured Workers and Families Increased by new Federal Government Subsidy

Dianna Meredith

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Employees who have voluntarily or involuntarily terminated employment for reasons other than gross misconduct or who have had a reduction in the number of hours of employment, may continue health insurance coverage at group rates that might otherwise be terminated or too expensive. This health coverage provided through the Consolidated Omnibus Budget Reconciliation Act, commonly known as “COBRA”, is usually more expensive because the participants generally pay the entire insurance premium. In other words, when a worker leaves a company, they can continue to pay THEIR share of the monthly premium, AND ALSO the EMPLOYER’s share, which is difficult, if not impossible, while out on workers compensation or a non work-lreated injury or disability.

In light of the rising unemployment rate and the cost of health insurance, the government has passed the American Recovery and Reinvestment Act of 2009 (“ARRA”) providing a 65% reduction in the cost of COBRA to eligible workers who were laid-off between September 1, 2008 and December 31, 2009. The subsidy is available for nine months of coverage unless another group health insurance is available. COBRA is generally available for 18 months. The subsidy is in the form of a tax credit for employers at the rate of 65% of the cost of COBRA for former employees and eligible family members. The employees receiving the benefit will be billed the remaining 35% of the premium. The reduced premium is only applicable from March 1, 2009. Employers with 20 employees or less are not required to provide COBRA continuation coverage.