Letter From John Olver: COBRA Premium Reduction Available

By U.S. Rep. John W. Olver
12:52PM / Tuesday, March 17, 2009

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U.S. Rep. John W. Olver

Over the past several months, many residents of Western and Central Massachusetts have contacted me with their concerns about the economy, including personal stories of job loss, plunging retirement funds and a failing housing market. 

Indeed, times are difficult. In fact, according to the Bureau of Labor Statistics, last month an additional 651,000 workers lost their jobs, bringing the total to 12.5 million.

As many of you are aware, on Feb. 17, President Obama signed the American Recovery and Reinvestment Act of 2009 (ARRA) into law to stimulate the failing economy. While we cannot expect this law to singularly or immediately "solve" our economic woes, there was a very important provision in the legislation that I want to draw your attention to — ARRA expands eligibility for COBRA continuation coverage and provides a premium reduction to certain qualified individuals.

COBRA (the Consolidated Omnibus Budget Reconciliation Act of 1985) provides for a temporary extension of employer-provided group health coverage, commonly called COBRA continuation coverage. ARRA will provide a 65 percent reduction in COBRA premiums for people who lose their jobs between Sept. 1, 2008, and Dec. 31, 2009. This premium reduction will last for up to nine months.

Workers and their families can apply for the COBRA reduction if the following applies:

■ They were involuntarily terminated between Sept. 1, 2008, through Dec. 31, 2009.

■ They have a modified adjusted gross income in 2009 and/or 2010 that does not exceed $125,000 for individuals or $250,000 for families.

■ They are not eligible for group health coverage through another source (such as a spouse's health care plan or Medicare).

Affected workers should contact their former employer or insurer that administers their COBRA to obtain the documents necessary to establish eligibility for the premium reduction. If workers have already paid the full amount for the next pay period, their former employer or insurer is required to reimburse them or credit a future payment.

Workers involuntarily terminated from their jobs between Sept. 1, 2008, and Feb. 16, 2009, and who either did not initially elect COBRA or dropped their COBRA coverage, will have a second chance to elect COBRA. These workers should receive notification from their former health providers by April 18. They will then have 60 days after they receive the notice to apply for the premium reduction.

Workers can also contact their former employers to say that they would like to take advantage of the second COBRA election period. If the worker receives the COBRA premium reduction, their coverage starts with the first period of coverage beginning on or after Feb. 17.

I believe this provision is necessary to help American families through these difficult economic times. Workers involuntarily terminated because of the recession need immediate assistance, and COBRA offers such aid.

For more information, there are a number of resources available through the Department of Labor:

■ There is a place to sign up for e-mail updates as new information becomes available concerning the roll out of this new benefit at the Department of Labor.

■ Call 1-866-444-3272 for U.S. Department of Labor's Employee Benefits Security Administration.

Sincerely,



Olver, an Amherst Democrat, represents the 1st Massachusetts District. He is the only Massachusetts representative on the House Appropriations Committee and is chairman of its Subcommittee on Transportation, Housing and Urban Development.

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