With over 2 million jobs lost in 2008 and up to 3 million more expected to be lost in 2009, one of the major concerns for millions of Americans right now involves health insurance.  One of the core issues in the 2008 Presidential election dealt with how to reduce the number of Americans who are currently uninsured.  The rapidly rising unemployment rate threatens to make the number of people without health coverage much higher in 2009.

When an employee loses a job, they also typically have to make a choice about health insurance.  For companies with at least 20 employees and a group health insurance plan, the law requires that they offer continuing health coverage to departing employees for up to 18 months after separation of service.  This law, known as COBRA, allows employees to avoid a lapse in health coverage as they transition to a new job and a new benefits package.  Instead of the employer covering part of the premium, however, the employee becomes responsible for the entire cost of the premium.

Because the cost of health insurance for many families can easily exceed $1000 every month, many employees choose not to continue health coverage, simply because they can’t budget for a cost like that after losing a job.

One of the proposals in the recently approved stimulus plan offers assistance to workers who lose their jobs that should allow them to maintain health coverage more easily.  As part of the plan, the federal government will subsidize 65% of the costs of maintaining health coverage for workers who have lost or will lose their job.  This could represent a savings of about $700 a month for many families as they look for new jobs.

There are a few rules that you should be aware of if you have lost a job or your current employment situation is at risk.  The subsidy will only be available to people who lose jobs between September 1, 2008 and December 31, 2009.  To qualify, the employee must have annual income of less than $125,000 for individuals, or $250,000 for families, and your former employer must still be in business for the subsidy to be given.  Also, instead of an 18 month time period, this benefit will be available for up to 9 months.  Finally, if you missed the window of time where you are allowed to enroll in a COBRA program, you will now be eligible again through this new program.

This is a great benefit that could save those who have lost their jobs thousands of dollars and allow them to maintain health coverage and avoid major medical costs that can be financially devastating.

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Tags: cobra, health insurance, unemployment

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