stimulus package

Stimulus Provides Free COBRA Health Insurance for Unemployed; What You Need to Know

Government to pay premiums for those who qualify from April 1 through Sept. 30

NBCUniversal, Inc.

After Congress passed the latest stimulus package, Shawna Stiles of North Richland Hills learned the government would pick up the cost of health insurance premiums for six months.

It was welcome news because her husband lost his job in February and Stiles said the family faced paying more than $1,500 per month to continue their health insurance coverage through COBRA.

“Who can afford to do that? First of all, unemployment is not enough even with the extras. It's not really enough for most families,” said Stiles.

Stiles said she tried to sign up her husband and 21-year-old son for coverage starting April 1 when Congress determined the subsidy would start.

“I said, 'Hey, just sign me up.' It was, 'Well, our systems aren't ready.' That's not my problem. If your systems aren't ready, then you need to manually process my paperwork,” Stiles told NBC 5 Responds. “It was just: 'No, no, no.' I continue to call and I continue to get told no.”

COBRA, the Consolidated Omnibus Budget Reconciliation Act, typically allows people who leave a company with 20 or more employees to stay on their workplace insurance plan as long as they can pay both their own and their employers share of the premium.

President Joe Biden signed the American Rescue Plan Act on March 11 and the government promised to cover COBRA premiums, for people who qualify, for six months. People who qualify won’t have to pay premiums under COBRA and the government promises to reimburse employers, plan administrators or insurance companies through a COBRA premium assistance credit.

The law doesn’t require notifications to go out to eligible people until the end of May so you may not have received any instructions yet.

Karen Pollitz, a senior fellow with the Kaiser Family Foundation, said some employers and COBRA administrators were still working out the details.

“I think some were following more closely as this was developing in Congress, they saw this coming, they were already beginning to prepare for it and others are kind of finding out about it and having to now catch up,” said Pollitz.

The clock is ticking. The subsidy ends after Sept. 30.

What if I can’t get the subsidy yet?

If you believe you are eligible and haven’t received a notice with the required forms, you can notify your former employer.

Pollitz recommends you fill out and sign this form, published by the Department of Labor.

Pollitz said, if you’re already enrolled in COBRA, turn it into your plan administrator.

If you’re trying to sign up, send it to your former employer.

“I think it would be important for people to fill out this form and send it in and keep a copy so that it's all date stamped. Hopefully, that will accelerate the process of the employer acting on it and putting your coverage back into effect,” said Pollitz.

Pollitz said if you can’t sign up immediately, save your medical records and receipts. If you qualify for the COBRA subsidy, you should be able to submit eligible claims made after April 1 and through Sept. 30 for reimbursement.

Pollitz said if you have a relationship with your provider, ask if it’s possible to wait a little longer to bill your insurer until the COBRA coverage kicks in.

Stiles sent the form in and a few days later, shared a note with NBC 5 Responds saying the COBRA plan administrator confirmed it has provided the information to her insurance company. It said the coverage would be activated in a few days – pointing to the average turnaround time of approximately 15 days.

Stiles’ COBRA benefits administrator told NBC 5 Responds by email, in part, “Discovery Benefits is working very closely with employers and individuals to identify who is eligible for the subsidy and will meet all communication deadlines and other requirements under the law. Unfortunately for employers and individuals, in some situations determining whether someone is subsidy-eligible can be complicated, in part because while the federal government has issued some guidance on subsidy eligibility, there are still a lot of unanswered questions.”

It adds that those eligible for the subsidy who have paid their premiums for the period of the subsidy (April 1 through Sept. 30) will get a refund if requested.

Who’s eligible to have their premiums covered?

The subsidy covers the premium costs for people who lost healthcare coverage due to an involuntary job loss or reduction in hours. In order to use the subsidy, you can not be eligible for Medicare or other employer-provided healthcare coverage, like coverage that may be offered through a spouse who is working.

Pollitz said if you turned down COBRA coverage before or dropped coverage because you couldn’t afford the premiums, you can go back and enroll now and you won’t have to pay back premiums for the months you turned down coverage.

However, once you receive notice of eligibility (required by May 31), you have 60 days to elect COBRA.

If you’re already enrolled in COBRA, eligible people would be entitled to have the government pay the premiums for six months.

The premium assistance lasts through Sept. 30 but may end sooner if you reach the end of your maximum COBRA continuation coverage period which is, generally, 18 months.

If the employee’s termination of employment was for gross misconduct, the employee and any dependents would not qualify for COBRA continuation coverage or the premium assistance – according to this FAQ published by the Department of Labor.

“I think a lot of people that are eligible for COBRA don’t know about it”

Stiles said she wants others impacted by the pandemic to know it exists, but it’s up to unemployed individuals to put in the work to sign up for coverage or get reimbursed for premiums during the subsidy period.

“I think a lot of people that are eligible for COBRA don't know about it. I think the lawmakers, they're not having to deal with it. So, they don't understand the bureaucracy that's being created,” said Stiles.

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