How to Reduce Cobra Costs
The Consolidated Omnibus Budget Reconciliation Act of 1985 or Cobra enables people to pay their health insurance despite being unemployed. It was passed by the U.S. Congress, signed by President Reagan and covers a variety of subjects related to disability, tobacco price support, private pension plans, emergency room treatment etc. It is titled X as is contradicts the Internal Revenue Code and Public Health Service act in regards to income tax deductions to employers.
It basically allows unemployed people to carry on with their group health insurance plan, which was initiated by their former employers. The newest amendment in Cobra came as recent as four years ago, which has enabled people dealing with unemployment to save as much as two-thirds of their health insurance costs.
Instructions
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In order to receive Cobra benefits you first need to qualify under specific criteria. First of all, your lay-off date must be after September 2008. Moreover, you can only receive benefits through your previous or most recent employer. If you did not pursue that opportunity, you will need to take extra measures to prove your eligibility.
Other factors include the number of employees in your previous company. That number should be more than 20 in order to qualify for Cobra reduction. One cannot be considered eligible if your unemployment was a result of your own actions or decisions. However, if the company was closing or you suffered a serious work related injury, then you will be entitled for reduction. -
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The American Recovery and Reinvestment Act of 2009 was initiated to help people deal with economic recession. It puts only 35 percent of the burden on an individual, with the remaining 65 paid back to the basic insurance provider in the form of tax credit. The Act enables individuals a new election opportunity, i.e. apply for Cobra within 60 days beginning February 17, 2009.
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Individuals can further purse the option of changing their coverage if the previous employers make certain additions. However, the former employer is not obligated to do so. If he or she allows former employees to switch coverage than the premium must be equal or lower.
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There are certain income limits which will affect the reduced premium payments. If your gross income is above $145,000, then the reduced amount must be paid back. The proportion will differ if the annual income falls between $125,000 and $ 145000.
