CT Governor Rell: New State Law Allows Stimulus To Extend COBRA Coverage for Unemployed

Urges Unemployed Connecticut Citizens to Take Advantage of Reduced Insurance Costs

April 17, 2009 -- Connecticut Governor M. Jodi Rell today announced she has signed legislation that will greatly reduce the cost of health insurance for Connecticut citizens who have been laid off from small businesses and want to continue their coverage under the federal “COBRA” law.

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“This will bring tremendous relief for so many families struggling to pay bills and simply stay afloat in this recession,” Governor Rell said. “Losing a job and health insurance at the same time makes a bad situation even worse, but this legislation allows us to use federal stimulus funds to make insurance under COBRA more affordable to a greater number of people. And the need for this relief has never been more critical.”

COBRA stands for the Consolidated Omnibus Budget Reconciliation Act, passed by Congress in 1986, which allows laid-off employees at companies with more than 20 workers to keep their health plan if they continued to pay the full cost of those benefits.

Under the stimulus program – the American Recovery and Reinvestment Act of 2009 (ARRA) – the cost of COBRA benefits paid by an employee laid off from a company with more than 20 workers is reduced from 100 percent to 35 percent. The employer must continue to pay 65 percent of the cost, but receives a tax credit for that expense. The stimulus act allows states to pass legislation that makes the same cost reduction (100 to 35 percent) applicable to workers laid off from companies with fewer than 20 employees.

Governor Rell sought this legislation – approved recently by the General Assembly – and signed it into law on Wednesday.

The stimulus act allows workers laid off between September 1, 2008 and February 16, 2009, to enroll retroactively. The new Connecticut law allows laid-off workers from small businesses with fewer than 20 employees to take advantage of the retroactive provision and pay greatly reduced insurance costs.

“Although this required just a minor change in our insurance laws, the benefits are substantial for Connecticut families,” Governor Rell said. “I strongly encourage anyone who may be eligible to take advantage of this opportunity.”

For more information on changes to COBRA provisions under the stimulus act, visit the state’s official stimulus Web site at: www.ct.gov and click on the CT Recovery link.

Source: Connecticut Governor