From listening to the talking heads on the news, the stimulus bill has generated nearly as many strong feelings as last year’s election. But the provision that will allow for federal assistance with COBRA premiums seems like a people pleaser all around.
For starters, the beneficiaries are individual people, not corporations. The health insurance provision in the stimulus package will allow the government to pay for 65% of the COBRA health insurance premiums for people laid off between September 1, 2008 and December 31, 2009. The assistance will continue for up to nine months.
Another plus is that the provision only applies to people who were laid off – not those who left voluntarily. So it is clearly aimed at helping people who have been directly impacted by the recession. There is an income limit of $125,000 for an individual and $250,000 for a married couple who file a joint tax return. People who have been laid off and are job hunting and/or receiving unemployment benefits will probably fall well under these limits, so the income cap probably won’t have much of an impact. Personally, I’d prefer to see it be a little lower. Families USA pegs the average COBRA family health insurance premium at $1069/month, which is a considerable sum of money. But it seems that a family earning $249,000/year should be able to pay the premiums without assistance. That’s my only complaint about the health insurance assistance provision in the stimulus package, and as I mentioned, most recipients are likely to fall well below that income mark anyway.
We frequently talk with clients in Colorado who are trying to decide between continuing their group health insurance policy through COBRA or getting an individual health insurance policy on their own. For people who know they’ll be needing to get their own health insurance long term, an individual policy makes sense. But for people with health conditions, COBRA is often the best (sometimes only) option. Until they get the paperwork and see how much it’s going to cost. The stimulus bill will now make it a more affordable option for people who have been laid off. The number of Americans without health insurance is already way too high. And since most people get their health insurance from an employer, the rising unemployment numbers were sure to drive the number of uninsureds higher. Hopefully the stimulus bill will help to mitigate the problem for a while. And hopefully the economy will get back on track by the end of the year when the government assistance program is scheduled to end.