Meltdown 101: COBRA help for small biz workers

By CANDICE CHOI – 7 hours ago

NEW YORK (AP) — The good news: The government is offering a big discount on health insurance for laid-off workers.

The bad news: Figuring out whether you're eligible can be confusing, especially if you work for a small business. And there are some tricky deadlines to consider.

Traditionally, most people who leave their jobs can stay on their former employer's health plan through COBRA, or the Consolidated Omnibus Budget Reconciliation Act of 1985. The idea is to give people access to health insurance while they're in between jobs.

The law only applies to people who worked at companies with 20 or more workers, but many states have their own laws to give workers at small businesses limited COBRA coverage as well.

Either way, the cost of COBRA is often prohibitive, since employers no longer pay a portion of your health care premium. But the new government program can help — it covers 65 percent of the premium cost for COBRA for up to nine months.

The program also offers many workers a second 60-day window to sign up for COBRA if they missed the original deadline to do so. Though people laid off from small businesses might not get a second chance to enroll, depending on the state where they live.

Employers are required to send notices to workers who are eligible for a second chance at COBRA by Saturday, so be sure to check your mail. And once again, the new election period ends 60 days after you're notified.

Here are some questions and answers offering more details about the COBRA subsidy.

Q: I work at a business with fewer than 20 workers. Am I eligible for the COBRA discount?

A: You might be eligible if your state has a "mini-COBRA" law. It works the same way as traditional COBRA, but usually for a shorter period of time.

Some states with mini-COBRA laws recently extended their coverage periods to allow workers to take advantage of the full nine months of subsidies being offered. They are Georgia, Ohio, Utah and Virginia, along with the District of Columbia, according to Families USA, a health care advocacy group.

Oregon, Texas and Vermont also have legislation pending to extend coverage to at least nine months, according to the group.

Among other states with mini-COBRA laws, some already allowed for nine months or more of coverage, while others have much shorter time limits.

Q: My state has a mini-COBRA law, but I missed the 60-day deadline to sign up. Do I also get a second chance to sign up?

A: The states that are giving laid-off workers a second chance are: Georgia, Kansas, Kentucky, Maryland, New Hampshire, New Jersey, New York, Rhode Island, South Dakota, Utah, Virginia and West Virginia, according to Families USA.

Effective dates for those laws vary, so contact your state insurance department for details. Other states not listed may also be working toward passing last-minute legislation.

Q: If I take advantage of the second election period, do I have to pay for retroactive coverage?

A: Your plan can require you to pay for retroactive coverage starting Feb. 17, which is when the federal subsidy became available. So if you were laid off in September and are signing up for COBRA for the first time, you could be responsible for premium payments (minus the subsidy) starting Feb. 17 or March 1, since most plans require payments on a monthly basis.

Remember, the total coverage period under COBRA doesn't change. So if you were laid off in September, you can only get COBRA for 18 months after that date. And again, the 65 percent subsidy covers up to nine months.

Q: How do I sign up for the COBRA subsidy?

A: Your plan should send you materials notifying you of your eligibility, along with the proper forms to sign up for the subsidy. If you think you qualify for the discount but haven't yet received any materials, don't hesitate to call your health plan provider.

Q: Is there any other help available if my state doesn't have a mini-COBRA law?

A: Check to see what public programs your state offers. Even if you don't qualify for any health insurance assistance, your children might.

Another option is getting an individual plan on the private market, but be sure to read the fine print. Individual plans often aren't as comprehensive as group plans.

For the record, the states that don't have mini-COBRA laws are Alabama, Alaska, Arizona, Delaware, Hawaii, Idaho, Indiana, Michigan and Montana, according to Families USA.

Legislation to establish mini-COBRA is pending in Pennsylvania. In Maine, only workers who are temporarily laid off or injured on the job are eligible.

Q: In what circumstances am I not eligible for the subsidy?

A: The intent of the subsidy is to help casualties of the recession. So it's for people who were laid off between Sept. 1, 2008, and the end of this year. People who took buyouts because they faced layoffs may also be eligible.

You don't qualify if you quit your job or were fired for misconduct, however.

If you earned $145,000 or more for the year you have to pay back the entire subsidy in taxes. Those who earned between $125,000 and $145,000 must pay back part of the subsidy.

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