Economic Hot Seat: Mellody Answers Your Questions








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I keep hearing that part of the stimulus package will be used to reimburse people 65 percent of the cost for COBRA health benefit continuation. However, everywhere I look I can't find any details about when or how this is going to take effect. Can you give me any "helpful" information on taking advantage of this. Thank you.

The new stimulus package does contain a provision whereby COBRA coverage will now be subsidized by 65 percent. The COBRA subsidy goes into effect March 1, 2009, and it covers 65 percent of a worker's COBRA premiums for up to nine months.

Given that COBRA costs an average of $390 a month for individuals and $1,280 for families, this is an important benefit and will enable many people to maintain their coverage. For individuals, the cost will be lowered to an average of $140 a month and for families, it will go down to about $450 a month. This COBRA subsidy is limited to workers who were laid off between Sept. 1, 2008, and Dec. 31, 2009.

Employers are required by law to send a notice no later than April 18, 2009, to all eligible individuals giving them a second opportunity to elect COBRA coverage. If you have been paying for COBRA since September 2008, the subsidy will not apply to your previous payments, only those made after Feb. 18.

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