Stimulus Provides COBRA Help

The stimulus signed by President Obama calls for more than $140 billion in healthcare spending, including more funds for research, money to maintain Medicaid benefits that might be cut as state budgets shrink, and incentives to encourage doctors, hospitals, and health insurers to adopt electronic medical records and e-prescribing.

Since consumers who lack health insurance often put off seeking medical care, however, perhaps the most important stimulus provision for healthcare providers in the short term is money to help pay health insurance premiums for workers who lose their jobs.

Under a federal law known as COBRA, laid-off employees have a right to keep their employer’s health coverage for 18 months after they leave their company.

For many who find themselves unemployed, however, this isn’t much help. The laid-off worker, who now must pay the entire insurance premium for what is often a benefit-rich policy, can face a bill of $1,000 or more a month for family coverage.

The stimulus package aims to ease the burden by earmarking $25 billion to pay 65% of COBRA premiums for those who lose their jobs between September 1, 2008 and December 31, 2009.

According to a survey conducted last year by the Kaiser Family Foundation, that would lower the monthly premium for coverage to about $130 for single coverage and $350 for a family.

To be eligible, the recipient’s income in the year he/she gets subsidy can’t be more than $150,000 for singles or $250,000 for couples who file a joint tax return.