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IRS expands COBRA subsidy eligibility

4/30/09 - The Internal Revenue Service recently issued Notice 2009-27 to clarify and perhaps expand eligibility for the COBRA premium subsidy. In the past, prior to this year's Economic Recovery Act, it was generally accepted that employees who initiated their own termination were not eligible for COBRA. The new IRS publication says they are eligible but the wording and details are still vague.

Employers and their insurance companies are still scrambling to implement the already in-force COBRA changes and it may be some time before procedural details on the COBRA enrollment of self-terminated employees are available for publication and comment by advisors and resources like our Web site. 

COBRA law only applies to businesses with more than 20 employees. Some states have laws that extend similar benefits known as "mini-COBRA" to smaller companies. It is unclear at this time whether the states that have similar laws for employees of smaller companies will adapt this new interpretation.

We advise any terminated employee who wants an extension of health insurance, regardless of the nature of termination or size of the employer, to make application with the health plan administrator as soon as possible. If the administrator determines that COBRA coverage is not available, they may make an alternate offer of individual conversion coverage. If this is unavailable or not cost-effective, other less expensive COBRA alternatives are available on this Web site. In any event, do not allow more than 60 days without some type of health coverage. In most cases a short term major medical insurance can be issued immediately to plug a gap in coverage or allow more time for a plan administrator to respond to a COBRA application. 


COBRAplan.com provides help with COBRA issues

COBRA continuation coverage may provide temporary protection when changing jobs, going through a divorce or negotiating other life transitions. Choosing the right health insurance is crucial to protect your health and financial security.