COBRA Subsidy (and Cal-COBRA)

The new COBRA subsidy is getting an enormous amount of press. In brief, individuals & families who qualify for the subsidy (must be involuntarily terminated from employment between September 2008 and December 2009 and meet an income guideline) are eligible to receive 65% of the COBRA premium as a subsidy from the former employer for the first 9 months.

In addition, the same rules will apply to California state mini-COBRA (Cal-COBRA) program as well. The final answer to exactly who will provide this subsidy is still being worked out. It appears most likely that the subsidy will be paid by the health insurance carrier, itself, and not the employer.

In general, state mini-COBRA programs are intended to some degree to replicate federal COBRA for groups which do not fall under the federal COBRA size requirement (20+ full-time employees (part-time to count fractionally) for at least 1/2 of the previous calendar year). In California, Cal-COBRA is the state program of continuation for groups between 2 and 19 employees.