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Q:  I was part of a work force reduction on 12/2/08, I have medical coverage until 1/31/10, and my separation agreement stated I am entitled to Cobra for 18 months after 1/31/10. The Human Resources dept of my former employer are now saying since I am SS age and Medicare age I cannot receive Cobra. Do I have to take Medicare since I will be 65 or should I be entitled to Cobra? With the 65% reduction Cobra would be a lot less expensive for me than Medicare, Supplement and Drug coverage would be. I am a widow and on my own. Please let me know if I can get the 65% reduced Cobra from my former employer who laid me off. Thank you

A:  Unfortunately, if you are eligible for Medicare, you are not eligible for the reduction in your Cobra premiums.  It sounds to me that Medicare may be your best option, due to the cost of Cobra being expensive and you not be eligible for the stimulus.

The American Recovery and Reinvestment Act of 2009 (also know as the federal stimulus package) provides for premium reductions and additional election opportunities for health benefits under the Consolidated Omnibus Budget Reconciliation Act of 1985, commonly called COBRA. Eligible individuals pay only 35 percent of their COBRA premiums and the remaining 65 percent is reimbursed to the coverage provider through a tax credit. The premium reduction applies to periods of health coverage beginning on or after February 17, 2009 and lasts for up to nine months.

The premium reduction for COBRA continuation coverage is available to "assistance eligible individuals".

An "assistance eligible individual" is the employee or a member of his/her family who:

·          is eligible for COBRA continuation coverage at any time between September 1, 2008 and December 31, 2009;

·          elects COBRA coverage; and

·          is eligible for COBRA as a result of the employee's involuntary termination between September 1, 2008 and December 31, 2009.

Those who are eligible for other group health coverage (such as a spouse's plan) or Medicare are not eligible for the premium reduction. There is no premium reduction for premiums paid for periods of coverage prior to February 17, 2009.

If an individual’s modified adjusted gross income for the tax year in which the premium assistance is received exceeds $125,000 (or $250,000 for joint filers), then the amount of the premium reduction during the tax year must be repaid.