Massachusetts officials are integrating a two-decades-old state program that heavily subsidizes COBRA health insurance premiums with the new federal COBRA premium subsidy to further cut the costs of coverage for employees who lose their jobs.
Launched in 1988, the Massachusetts program—known as the Medical Security Program and administered by the Division of Unemployment Assistance—reimburses 80 percent of COBRA premiums for unemployed workers with adjusted gross incomes of up to 400 percent of the federal poverty level.
The Massachusetts program is the only one of its kind in the country.
Under economic stimulus legislation signed into law last month by President Barack Obama, the federal government will pay 65 percent of COBRA premiums for employees who lose their jobs between September 1, 2008, and December 31, 2009. The subsidy is available for up to nine months, until an employee is eligible for coverage from a new employer or becomes eligible for Medicare.
Massachusetts will apply its 80 percent subsidy to COBRA beneficiaries’ 35 percent share. That will result in beneficiaries paying 7 percent of the premium and the Massachusetts Security Program paying 28 percent.
That type of integration between the Massachusetts program and the federal COBRA premium subsidy is explicitly allowed under the stimulus law.
As of January, more than 3,500 Massachusetts unemployed workers were receiving the state-provided COBRA premium subsidy, state officials say.
Filed by Jerry Geisel of Business Insurance, a sister publication of Workforce Management. To comment, e-mail editors@workforce.com.
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