For those who work at small companies, today is a better day to lose that job than yesterday. That’s because today a new state law regarding health insurance benefits takes effect, allowing employees in small business to keep their insurance coverage after losing a job. The legislation is known as “mini-COBRA” because it affects workers for small businesses but covers them for only nine months instead of the typical 18 months of standard COBRA. Seth I. Corbin, an attorney with Fox Rothschild in Pittsburgh, said the new mini-COBRA law would coordinate with the new federal COBRA subsidy, which is part of the American Recovery and Reinvestment Act of 2009. The federal subsidy provides 65 percent of the cost of health insurance for people who qualify for COBRA and now mini-COBRA. COBRA takes its name from the Consolidated Omnibus Budget Reconciliation Act of 1986, which, in part, called for workers to be able to keep their health insurance if they paid for it. Over the years, as the cost of insurance has risen, keeping insurance through COBRA became unaffordable for most people. A study released in January by Families USA found that COBRA, which costs an average of $1,069, ate up 83.6 percent of the average monthly unemployment compensation. The American Recovery and Reinvestment Act signed by President Barack Obama in February called for 65 percent of COBRA to be federally subsidized. Federal COBRA applies to only those companies with 20 or more employees. Mini-COBRA applies to companies with more than two but less than 20 employees. While large companies are supposed to carry the cost of the subsidy until they can take it as a write-off on federal taxes, for the small companies the law provides that the administration of mini-COBRA will be handled by insurance companies; so the health insurer will manage the account, taking the payments and carrying the cost of the subsidy until it takes the write-off from its tax payments.
