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Accessing COBRA Benefits After Layoffs

With healthcare costs rising and a current economic recession forcing many companies to slash jobs, many Americans have lost or are at risk of losing crucial employer-sponsored health coverage.  This is having a significant impact on individuals with bleeding disorders and their families who cannot afford to pay for health coverage on their own.

In recent months both federal and state governments have taken steps to help people maintain their health insurance after a layoff.  Here we examine COBRA provisions under the American Recovery and Reinvestment Act of 2009 (i.e., Recovery Act or the stimulus package) and other state initiatives that allow workers to maintain employer-sponsored health benefits. 

COBRA, the Consolidated Omnibus Budget Reconciliation Act, allows an individual who worked for a company with more than 20 employees and his/her family members to continue coverage through employer-sponsored health plans for up to 18 months after voluntary or involuntary termination, or an employer-imposed reduction in work hours.  An individual generally will have 60 days to enroll in COBRA and is required to pay both the employee and employer share of the premium. 

Although COBRA is more expensive for the individual than it is for an active employee, it is typically less expensive than individual health coverage.  Thus, it is often regarded as an important program that ensures continuous access to crucial medical benefits.  However, it’s infrequently accessed because the out-of-pocket costs are too high for most people. 

Under the Recovery Act, the federal government addressed the cost issue associated with COBRA by providing temporary subsidies to certain workers who were laid off during the current economic recession.  Specifically, individuals who lost a job between September 1, 2008 and December 31, 2009, and their family members are eligible for a nine-month subsidy from the federal government, which makes them responsible for only 35% of their COBRA premium.  Employers and health plans are reimbursed for the remaining 65% by the federal government through a payroll tax credit.  In addition, individuals who previously turned down COBRA between September 1, 2008 and February 17, 2009 (when the Recovery Act was signed by the President) and who meet the requirements are also eligible for the subsidy.  (Note: only individuals with income at or below $125,000--or $250,000 for couples--are eligible for the full subsidy.  Some people with incomes above those figures may qualify for the subsidy but will have to repay a portion.  Also, an individual is no longer eligible for the subsidy if he or she has other group coverage or becomes eligible for a public plan such as Medicare.)

In addition, several states have continuation plans, or mini-COBRA plans, which extend employer-sponsored health benefits to individuals laid off by businesses with fewer than 20 employees and their family members.  As with the federal COBRA, the individual is required to pay both the employee and employer share of the premium and, in some instances, an administrative fee.  Under the Recovery Act, individuals who qualify through a state continuation plan are also eligible for the nine-month subsidy if their state program meets the requirement.  Unfortunately, some individuals cannot access the subsidy because of eligibility requirements (i.e., length of COBRA months) or their state’s mini-COBRA plan may differ from the federal COBRA provisions. 

Following passage of the Recovery Act, several states and the District of Columbia have adopted or introduced legislation to increase the coverage periods in their mini-COBRA plans so that their residents can qualify for the subsidy.  Those states include Georgia, Ohio, Utah, and Virginia. In addition, several states have adopted “second chance” legislation so that individuals who previously turned down mini-COBRA plans can now qualify for the subsidy. Those states include Georgia, Kansas, Kentucky, Maryland, New Hampshire, New Jersey, New York, Rhode Island, South Dakota, Utah, Virginia and West Virginia.  Pennsylvania recently adopted new legislation establishing a mini-COBRA plan. Without it, residents in PA who worked for businesses with fewer than 20 employees would not have been eligible for the subsidy.

Both COBRA and state mini-COBRA laws require the employer or health plan to notify eligible individuals of their right to continue coverage through their employer’s group health plan(s). 

For information on COBRA and mini-COBRA, contact: Sally McCarty, NHF Insurance Consultant:; Michelle Rice, NHF Regional Director:; or Ruthlyn Noel, NHF Manager of Public Policy:

For state-specific information, go to the Foundation for Health Coverage Education Web site:



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