What to Do If You're About to Lose Your Federal COBRA Subsidy

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An expanded COBRA subsidy that temporarily covers 100% of your healthcare premiums due to unemployment is ending Oct. 1. The program lets you to keep your former employer’s healthcare plan for at least 18 months, but normally you have to cover the full cost, which many people find too expensive. With the subsidy ending, you might be looking for a cheaper alternative—so here’s a look at the options.

Why the COBRA program without the subsidy isn’t so great

The Consolidated Omnibus Budget Reconciliation Act, or COBRA, allows you to continue with your employer’s healthcare coverage if you or a household member had a reduction in work hours or involuntarily lost your job, for up to 18 months (or 36 months in some cases).

The idea is to provide stopgap insurance until you either find a new job with coverage, or sign up for a new policy elsewhere. While it sounds great in theory, these group plans are normally heavily subsidized by the employer—83% of the cost, on average. That means the average cost for individuals is about $623 per month, which you’d be paying while unemployed. With the temporary 100% subsidy ending, you might need to look elsewhere for coverage.

So what other healthcare options are available?

If you’re in the COBRA program, your former employer should be sending you a letter by Sept. 15, notifying you that the subsidy ends Oct. 1. The letter is also legally required to tell what your monthly bill will be without the subsidy.

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If it’s too pricey, you’re entitled to a special enrollment period on the Affordable Care Act’s marketplace for 60 days after you’ve been notified of the change. You can apply for coverage at the ACA Health Insurance Marketplace—when prompted, provide “loss of coverage” as your reason for applying (more details about applying can be found here ).

The good news is that Obamacare is a good option right now as there are recent subsidies that reduce bronze and silver plan premiums down to $0 per month, provided you’ve been unemployed at some point in 2021.

When you apply, depending on your income and the state you live in, you might also qualify for Medicaid, which exempts or subsidizes most out-of-pocket costs like deductibles and copays. For more information on applying for healthcare insurance in general, check out the healthcare.gov webpage.

   

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