Under the American Recovery and Reinvestment Act of 2009 (ARRA), the government is offering to pay 65 percent of premiums for COBRA continuation health insurance coverage if you involuntarily lost your job between September 1, 2008 and December 31, 2009.
According to the U.S. Department of Labor (see the excerpt below), laid-off workers were supposed to not have to worry about fronting the premiums and the employers/plan administrators would be the party to get the 65 percent reimbursement from the government.
Q10: How does the 65% premium subsidy get paid to me?
You will not receive a payment. Assistance Eligible Individuals are responsible for paying only 35% of the COBRA premium for the period of coverage. The remaining 65% of the premium is reimbursed directly to the employer, plan administrator, or insurance company through a payroll tax credit.
But an article in the Washington Post said everything might not be working as planned.
The author described his situation where he was required to pay his COBRA continuation premium of more than $1,400 a month or his coverage would be cancelled. Instead of paying 35 percent of the premium to his former plan administrator, he had to front the money and wait for reimbursement.
In the article, the author heard these reimbursements might not be made available until this summer.
That’s much too long, and frankly it’s an outrage this is happening. The DOL clearly states that it’s the employers/plan administrators that have to put up the cash.
We’ll keep our ears open for similar situations, but we hope this isn’t common. Let us know if it is.