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COBRA Stimulus Package Plan

COBRA or Consolidated Omnibus Budget Reconciliation Act is a law which was passed in 1985 to help people who are unemployed to carry on with their health insurance. When the individual is working, the premium for his health insurance is paid by the employer, but under COBRA, when he is loses the job the health insurance will continue to be the same but the premium will have to be borne by the unemployed individual.

In February 2009 the Stimulus Package Plan as envisaged by President Obama was made into a law by passing of the American Recovery and Reinvestment Act. As per this Stimulus Plan a sum of $24.7 billion has been allocated to provide a subsidy of 65% on health insurance premiums to individuals who are unemployed and come under COBRA. This came to be known as the COBRA Stimulus Plan and the unemployed are greatly benefited by this. The 65% reduction is one part of the COBRA Stimulus Plan and the other part is that people who are unemployed and not enrolled under the COBRA program can do so.

Under the sever onslaught of the economic downturn many have lost their jobs and families are struggling to survive. At such a time COBRA Stimulus Plan provides a lifeline to such people in keeping their health insurance active by giving 65% reduction of the premium. This will ensure that the unemployed person does not lose his health benefits in these hard times. Many people who lost their jobs had stopped paying their health insurance premiums because they just could not afford the full amount. Such people as per the COBRA Stimulus Plan can now re-enroll in the program and get the benefit of the reduced premiums.

This is a very attractive proposition and now let us see who can qualify for the COBRA Stimulus Plan. People who were laid-off or lost their jobs without any fault of theirs in the time between 1st September 2008 and 31st December 2009 are eligible to re-enroll themselves in the COBRA program. Also the yearly income for an individual should not be more than $125,000 or for couples who file their tax returns jointly, it should not exceed $250,000. The individual will not get the premium subsidy of 65%, if he enrolls for an entirely new health insurance plan from his latest employer, or becomes qualified to receive Medicare.

The cost of the subsidy is borne by the US Treasury Department and is paid in the form of refundable tax credits directly to the previous employers who will usually be the COBRA administrators. All information for again enrolling will also be available with the previous employer, and also the current rate of subsidy. The subsidy is only for premiums paid after 17th February 2009 and the premiums paid before will not get any sort of refunds.

The COBRA Stimulus Plan also ensures that people who are 55 years old or more and have worked in the same company for 10 years or more can retain their health insurance plan till they attain 65 years of age.

Tags: credit, Income, Insurance, jobs, law, Stimulus, tax

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