COBRA Coverage Relief
Due to major layoffs and the closing of many businesses, scores of people are being left without health insurance. The Consolidated Omnibus Budget Reconciliation Act (COBRA) gives some lucky workers the choice to continue group health benefits, but at a very steep price. In most cases, these ‘lucky’ people get to pay 102 percent of the cost of their available insurance plans. They are paying their own part, the employer’s part, and a 2 percent administration fee.
While it is absolutely necessary for many to continue health insurance through COBRA, the price can sometimes be too much to bear. Many pay nearly 50 percent of their unemployment benefits just to continue their health coverage, and the benefit of health coverage is oftentimes at the cost of being able to pay other bills and living expenses. Fortunately, the new federal stimulus plan will be making temporary changes that will ease the burden for some participants.
Under the new plan, participants who lost their jobs since September 2008 will only pay 35 percent, instead of 102 percent, for nine months. The former employer will pick up the rest of the bill, but will be allotted tax credit. This break will only help those laid off, not those who former employers have gone out of business. If the business terminates the plan, it is terminated for the former employee as well.
Return to the Social Security Disability SSI Benefits Blog
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