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Extensions on Unemployment Benefits & COBRA

Two programs that come in especially handy for people who lose their jobs are unemployment insurance and COBRA health care coverage. Both programs have extensions available to help tide people over until their next job. However, while extensions of the unemployment insurance program are available to most or all participants, extensions of COBRA are available only to a limited group of people.

  1. Unemployment Extensions

    • Extensions of unemployment insurance programs, which typically last 26 weeks, are available through 2011. Residents in all states may receive benefits for a total of 60 weeks. Residents in states with unemployment rates at 8.5 percent or higher may receive extensions lasting 99 weeks, almost quadruple the standard duration of the benefits program. Residents in states with unemployment rates that are lower than 8.5 percent, but still over 6 percent, may receive benefits for 73 to 93 weeks.

    COBRA Extensions

    • COBRA, the Consolidated Omnibus Budget Reconciliation Act, gives employees who lose their jobs the option to remain in their employer's group health care plan for 18 months after separation from employment. An 11-month extension is available only to employees who suffer a disability during their first 60 days of COBRA coverage and receive an affirmative ruling on their disability from the Social Security Administration.

    Requirements

    • Out-of-work employees must fulfill the requirements for both unemployment benefits and COBRA coverage. Recipients of unemployment benefits must be available for work and able to accept suitable job offers. In extended benefits, which comprise 13 or 20 additional weeks of unemployment benefits in most states, the work search requirements are stricter. The requirements call for a "systematic and sustained" job search. Those eligible for a COBRA extension, meanwhile, may have to pay higher premiums. During the standard COBRA period, premiums may not exceed 102 percent of the costs for active employees. During the extension, premiums may rise to 150 percent of coverage costs.

    Considerations

    • With extensions in effect, out-of-work employees exhaust their COBRA coverage well before they get through their 60 to 99 weeks of unemployment benefits. Depending on their overall cash flow and necessary living expenses, they may be able to use a portion of their unemployment benefits to find health insurance after their COBRA coverage expires. Once they exhaust their COBRA eligibility, they become HIPAA-eligible individuals, meaning they have a right to buy insurance with no exclusion period for pre-existing conditions. They must not be eligible for another group plan, such as a spouse's plan, or Medicare or Medicaid.

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