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COBRA Subsidy Expires

Compliance Attorney, HNI

Beginning in March 2009, employees who were involuntarily terminated could qualify for a 65% federal subsidy toward the cost of COBRA premiums.  As unemployment rates continued to climb, for some unemployed individuals and their families, the subsidy made COBRA premiums affordable for many who might have chosen to go without health insurance.

While several studies have attempted to measure the impact of the COBRA subsidy, the findings are inconsistent.  It is expected that the Department of Labor will conduct its own study which will be released in March 2012.  In the meantime, we’ll rely on the changes Health Care Reform will bring to the health insurance industry to address rising costs. 

The COBRA subsidy program was first initiated in March 2009 and subsequently modified and expanded several times.  Since no further extensions have been agreed upon, the 65% COBRA subsidy is no longer available beginning September 1, 2011

While the expiration of the COBRA subsidy will impact a small portion of our population, employers should be aware that all qualified beneficiaries on their plan under COBRA are responsible for 100% of the premiums, plus a two percent administration fee (if applicable), beginning September 1, 2011.  Employers should consider notifying those employees impacted by the expiration of the COBRA subsidy.

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