Federal stimulus reduces cost of COBRA for some

For people who are laid off, after the paychecks stop, the cost of health insurance goes up.

By law, employers with 20 or more employees must offer COBRA continuation health coverage. It allows former employees to keep health insurance benefits for up to 18 months. However, the employee has to pay the full premium, plus 2 percent. That can get expensive.

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The federal government is stepping in to help by picking up 65 percent of the COBRA premium for those who qualify.

The subsidy was welcome news for Phillip Waldron. When he was laid off from his IT job with CarQuest before Christmas, he also lost health coverage for his family of four.

"Yeah, that's the scariest thing. It's so expensive, and yet it's so important. I mean, you can get by on hot dogs and chicken nuggets. It's not fun, but you can do that. But you have to have your medication to go to school and have a successful day,” said Leslie Waldron, Phillip's wife.

The Waldrons soon learned that their sons, Jonathan and Jonah, were eligible for Medicaid. They can go to the dentist, doctor and get prescriptions for just $1. But health insurance for Leslie and Phillip wasn't going to be as cheap.

"We knew that the cost of COBRA was overwhelmingly expensive and that it would draw from all of resources and take all of our funds away,” Phillip Waldron said.

The Waldrons turned to eHealthInsurance.com, a Web site that compares the cost of COBRA with private health insurers and tailors coverage to individual needs.

"One of the things about the Web site is that you can run scenarios where you can change the deductible levels and benefit levels, and you can see the pricing changes,” said Sam Gibbs, an eHealthInsurance.com expert.

Comprehensive COBRA coverage came to about $1,000 month, so the Waldrons found a slimmed down private health insurance plan for $350 a month. The cheaper plan carried a $5,000 deductible.

"In case, you know, we break an arm or get in a car accident, you never know and then at least we have something to help us work out payment plans,” Leslie Waldron said.

Bob Harvell, with the North Carolina Department of Insurance, said thanks to President Barack Obama's stimulus plan, the price of COBRA should be 65 percent cheaper for some people.

To qualify, you must have been laid off after Sept. 1, 2008, and before Dec. 31, 2009. You can't make more than $125,000 per year. If you have a family and file jointly, you can’t make more than $250,000 a year.

The COBRA subsidy lasts for nine months.

"If somebody says, 'Well we'll pick up 65 percent of that so you can continue (being insured) until you can get yourself on your feet, maybe six or seven months, we'll help fund that for you.' Well, yeah, that's a great help for an individual,” Harvell said.

Employers should be sending out packets this month about the discount, so families like the Waldrons can apply for the cheaper COBRA.

However, if your company went out of business, you are out of luck.

Confused about how to qualify? Call your employer, or call the N.C. Department of Insurance at 1-800-546-5664 or the Department of Labor at 1-866-444-3272. If they can't help you, they can put you in touch with someone who can.