December Layoff Employees Face Problems in COBRA Subsidy

December 3, 2009

Washington - Employees who were to be laid off in December, and who are supposedly entitled for a 65% COBRA health subsidy, might not be able to receive it due to a technicality in the law.

In the stimulus bill, employees who were laid off from their job between Sept.1, 2008 to Dec. 31, 2009 but are covered by their employer’s health insurance plan are generally entitled to receive a 65% government subsidy.

Employees should first be eligible for COBRA by December to receive such financial aid. The problem arises because a number of employers continue to pay the company-covered insurance coverage through the end of the specific month wherein employees were laid off.

If this is the case, employees who became unemployed in December will not be technically eligible for the subsidy until January the following year. However, the law mandates that no subsidy will be provided for laid-off employees after the year ends.

Numerous bills were already proposed to extend this subsidy until June the following year but no action has been currently taken about it and the outcome remains uncertain.