The Stimulus Act and Health Insurance

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Tim is a licensed life insurance agent with 23 years of experience helping people protect their families and businesses with term life insurance. He writes and creates stuff for QuickQuote and other insurance and financial websites...

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UPDATED: Feb 25, 2020

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President Barack Obama signed into law the American Recovery and Reinvestment Act (The Stimulus Act) on Tuesday, February 17, 2009. The Act amounts to the largest economic stimulus package in the history of the United States.

The Act addresses very little in the way of insurance. Health insurance is addressed by the Act as it includes a provision for government subsidies for COBRA coverage. COBRA refers to a law that allows some terminated employees to remain on their former employers’ health insurance plan for a period up to 18 months (up to 36 months for some dependents). Employees must pay the premiums for the coverage out of their own pockets. Anyone that has been on COBRA can tell you this is not often a desirable option, as the premiums can be quite expensive. However, if a person has pre-existing conditions or cannot otherwise qualify for individual health insurance, COBRA may be the only option, undesirable or not.

The Stimulus Act provides for subsidies of up to 65% of terminated employees’ COBRA premiums for nine months. The total price tag to the American taxpayer…. An estimated $25 billion.

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