April Newsletter

The Federal Stimulus Package: Help with Health Insurance Premiums

Oregon.gov   March 17, 2009

The federal government's economic stimulus package approved Feb. 17, 2009, includes money to provide short-term help paying health insurance costs for some Oregonians who recently lost jobs or who will lose jobs in coming months.

The program helps pay the monthly health insurance premium for individuals who involuntarily lose their jobs and qualify under federal COBRA law or Oregon's state continuation law to continue their employer health plan for themselves and their family members. Normally, terminated employees must pay the full costs.

• With this program, individuals pay 35 percent of the health insurance premium. The previous employer or health insurance company pays 65 percent and seeks reimbursement from the federal government.
• This subsidy is good for up to nine months for those who worked for an employer with 20 or more employees and are eligible to keep their employer plan under COBRA.
• This subsidy is good for up to six months for people who worked for a small business with fewer than 20 workers or other employer not subject to COBRA, and are eligible to continue their employer plan through the state continuation program. This is because Oregon law only lets people continue their employer plan for six months. The Insurance Division is proposing that the 2009 Legislature allow ex-workers to continue their employer plan for nine months so that people can take advantage of the three additional months of subsidy.
• The 65 percent paid by the employer or health insurance company is reimbursed as a credit against their payroll taxes or as a refund.

• Employees who are laid off from Sept. 1, 2008, through Dec. 31, 2009. People who didn't initially continue with their employer plan get a "second chance" if they worked for an employer with 20 or more employees. The Insurance Division proposes the 2009 Legislature give people who worked for smaller businesses or other employers not subject to COBRA, a "second chance," as well.
• Job loss must be involuntary and not for gross misconduct. People who quit their jobs are not eligible.
• The employer must be in business and still offer a health insurance plan.
• Full subsidy: Individuals with modified adjusted gross incomes of less than $125,000 ($250,000 for joint filers).
• Partial subsidy: Individuals with modified adjusted gross income between $125,000 and $145,000 ($250,000 and $290,000 for joint filers).
• No subsidy: Individuals with modified adjusted gross income greater than $145,000 ($290,000 for joint filers).

• The health insurance plan is the same plan you had with your employer.
• If your employer offers more than one health plan, the employer can give you the option to select a cheaper insurance plan than you had when you worked for the business
• You won't have to wait to have existing medical conditions paid for by insurance if you participate in the new subsidy program and you previously met your pre-existing condition exclusion period

(Employers with 20 or more employees)

• If you lost your job on or after Sept. 1, 2008, your previous employer or health plan administrator must send forms to you by mid-April
• You have 60 days after you get the notice to decide if you want to participate.
• If you are already enrolled in COBRA, you are eligible for the subsidy starting Feb. 17, 2009. If you pay the full premium after this date you can get a refund or credit for 65 percent of what you paid.
• You will not be reimbursed for premiums paid before Feb. 17, 2009.

(Employers with less than 20 employees or other employers not subject to COBRA)

• Let your employer know immediately that you want to continue your health insurance.
• If you are already enrolled in state continuation, you are eligible for the subsidy starting Feb. 17, 2009. If you pay the full premium after this date you can get a refund or credit for 65 percent of what you paid.
• You will not be reimbursed for premiums paid before Feb. 17, 2009.

• You must tell your previous employer, health plan administrator or insurance company, if you are eligible for any other group health plan or Medicare. These events end your subsidy.
• If you don't give notice, you may get a tax penalty.

Example: COBRA employee

For years, Susan's employer-based health insurance covered her, her husband and their child. She was laid off in December 2008. She got a piece of paper explaining that under federal COBRA law, she could continue her employer plan but she would have to pay the full costs - $1,000 every month. She couldn't afford this.
Now, with the stimulus help, she will get another notice giving her a second chance to continue her employer's health plan. This time, she will pay $350 monthly for her family's insurance and her employer will pay $650. Her coverage would begin March 1. Susan has asthma and her plan must cover this condition as soon as she resumes her insurance. If Susan finds the $350 is too steep, she can continue coverage for some members of her family but not for others.
Meanwhile, she is looking for a new job. If she finds a job and becomes eligible for the new employer's insurance before her nine months of stimulus help is up, she must immediately report that to her former employer.

Example: state continuation employee

Joe lost his job at a small business in January 2009. He paid the full, $500 monthly premium in January and again in February to keep his employer health plan. Starting March 1, he was eligible for the 65 percent subsidy, meaning his insurance will now cost $175 a month. Joe is able to keep his employer plan through June (a total of six months after he first lost his job).

• The Oregon Insurance Division: Consumer advocates can be reached at 1-503-947-7984 or toll-free at 1-888-877-4894. You may also e-mail cp.ins@state.or.us
• The U.S. Department of Labor: Find information at: http://www.dol.gov/ebsa/cobra.html
• IRS: Employer information on claiming credit for medical premiums paid to employees: http://www.irs.gov/newsroom/article/0,,id=204505,00.html
• IRS: Questions and answers for COBRA employers: http://www.irs.gov/newsroom/article/0,,id=204708,00.html

• COBRA: This federal law allows employees who lose their job to continue their employer health plan for 18 months. It applies to employers with 20 or more employees. You may be eligible for COBRA if you divorce, separate, or the working spouse dies. Your insured children who are too old to qualify for your employer insurance are eligible for COBRA. COBRA coverage for some can be extended up to 36 months.
• Oregon State Continuation: This state program allows employees who lose their job to continue their employer health plan for six months. It applies to employers with fewer than 20 employees or other employers not subject to COBRA. (The Insurance Division is proposing the 2009 Legislature extend state continuation from six month to nine months.)