How to Apply for COBRA Health Insurance and Subsidy

These days, as the economy worsens, more and more people are becoming unemployed and losing their health insurance coverage.  The government offers COBRA coverage to provide unemployed workers with health insurance while they are searching for new jobs.  The government has also begun to offer a COBRA subsidy, wherein they pay 65% of the cost of COBRA insurance. 

1. Educate yourself regarding COBRA insurance.  Prior to applying for COBRA insurance, it is important that you understand the policy.  The government passed a law that requires companies to offer health insurance coverage to laid-off employees for a minimum of 18 months.  Through the COBRA health plan, you are allowed to purchase your group health insurance, despite the fact that you are no longer employed by the host company.  This type of insurance can be extremely expensive, because employers often require workers to cover 100% of their health insurance costs.


2. Determine whether you meet the program requirements.  While COBRA insurance is available to all terminated employees, there are certain requirements that you must meet in order to be eligible for the subsidy.  The subsidy is valid for people who were involuntarily terminated between September 1, 2008 and December 31, 2009.  An individual must not exceed an annual income of $125,000 and couples must not exceed an income of $250,000 to be eligible.  Subsidies are valid for 9 months.


3. Complete your COBRA application.  The exact application process varies between states and companies, so it is important to contact your human resources office to obtain exact application instructions.  By law, your company is required to provide you with COBRA application paperwork within 30 days of termination of your employment.  You will need to complete this application and return it within the given timeframe. 


4. Apply for the COBRA subsidy.  The COBRA subsidy is a new program that is being offered by the federal government.  Because the cost of COBRA insurance is so high, most unemployed workers cannot afford to maintain their health insurance after losing their jobs.  The subsidy program helps to take away some of the financial burden.  The government pays 65% of the costs of maintaining one's health insurance coverage.  That means that the individual is only responsible for 35% of the cost of the health insurance premiums.  You will receive a notice from your employer and insurer in the mail with information regarding the subsidy and a copy of the subsidy application.  You have 60 days to apply for the subsidy, so complete the application process in a timely manner.  Subsidy benefits can be applied retroactively.