There are some snags in free COBRA health insurance for unemployed. Here’s what you need to know

Linda, a lawyer from California who was laid off from her job in January, is like millions of others in the pandemic who are living without health insurance.

But she discovered that the government would fully subsidize her COBRA health insurance premiums from April until September, thanks to a provision in the latest stimulus package. She immediately contacted her insurer to sign up. Linda (she asked not to use her full name) was eager to go to the doctor after contracting a painful urinary tract infection this month, which she feared could spread to her kidneys.

The rules in the $1.9 trillion relief bill passed in March seemed straightforward enough: The government would pay for people’s COBRA premiums for six months beginning on April 1. COBRA, or the Consolidated Omnibus Budget Reconciliation Act, typically allows people who leave a company with 20 or more employees to stay on their workplace insurance plan if they can pay both their part of the premium and the share their employer was formerly paying.

Of course, many newly unemployed people can’t afford to do so, but this provision in the stimulus package is aimed at changing that by slashing people’s monthly insurance premiums entirely for six months.

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But when Linda emailed her previous insurer in April asking if she was free to go to the doctor for treatment of her infection, she was surprised to be told that the government subsidy isn’t available yet.

“[F]orms and processes have not yet been provided nor finalized by the IRS or DOL,” she was told, according to the email seen by CNBC. “Until notified otherwise, we must operate as ‘business as usual.'”

“It’s frustrating to say the least,” said Linda, who worries she’ll have to go to the emergency room for her infection and rack up debt. She’s also had to stop taking her medication for anxiety and depression because of its cost.

Healthcare advocates are worried that many other people may be running into similar issues trying to access the temporary COBRA subsidy, which the U.S. Department of Labor has said began on April 1.

Getting the new system up and running will take coordination between multiple government agencies, companies and insurers. Meanwhile, employers don’t even have to notify those who could be eligible until the end of May.

“It’s available for such a short period of time, and you don’t even learn about it until May 31?” said Sabrina Corlette, co-director of the Center on Health Insurance Reforms at Georgetown University’s McCourt School of Public Policy. “A lot of people may miss out on the opportunity.”

The Department of Labor did not respond to a request for comment.

While the new subsidy is rolled out, here’s what we know.

The good news is that even if you can’t sign up for a few weeks or months because of operational delays, if you qualify for the COBRA subsidy, any eligible claims racked up after April 1 (and before the end of September) should be covered, experts say.

But expect to have to put in some work to get this sorted out.

Save all your medical records during this period, said Caitlin Donovan, a spokeswoman for the Patient Advocate Foundation, a nonprofit that helps patients access and pay for healthcare.

“Keep a folder with any paperwork you get, any checks you write, and ask for receipts,” Donovan said.

Doing so will make it easier for you to submit any claims or bills to your insurer once the subsidy kicks in, or to get reimbursed for any expenses you laid out and that qualify for coverage.

If you’re worried about upfront costs, try to explain to your doctors that you’re waiting for your COBRA coverage to kick in, and ask if they can wait to bill your insurer, experts say.

You’ll be eligible if you involuntarily left a job that offered health insurance and you do not qualify for another employer plan or Medicare, Donovan said.

“You would even qualify if you turned down COBRA before,” Donovan said.

Any family members on your plan would also be fully covered. If you still have your job, but your hours have been cut to the point where you lost access to your company’s health insurance plan, you may also qualify for the six-month subsidy.

You should receive written notification of your eligibility, likely from your employer or health insurance company. If you haven’t heard anything, reach out to your former insurer.

The government will cover 100% of your COBRA premiums. You could still be on the hook for any co-pays and deductibles.

The subsidy will last through Sept. 30, 2021.

Typically, you can’t be on COBRA for more than 18 months in total, so some people may be cut off sooner than that date though, depending on when they began their coverage.

Don’t worry. It’s not too late for you to take advantage of this relief.

Laid-off workers typically have to sign up with COBRA within 60 days after their employment ends. But even if you, say, turned down the coverage in August 2020 because the premiums were too high, you can now go back and enroll, according to the Georgetown University Health Policy Institute.

Keep in mind though that once you receive notice of you eligibility for COBRA, you will have to sign up within 60 days.

Usually if you don’t enroll right away with COBRA and decide to do so later, you have to back pay premiums because you’re not allowed to have a gap in coverage.

The relief bill temporarily changes that policy.

According to the experts at Georgetown, you would not have to pay premiums back to the date you were originally eligible to enroll in COBRA.

However, you’ll only be covered for claims starting April 1.

The biggest drawback of COBRA is usually the cost for laid-off workers, which can be thousands of dollars a month. The relief bill clears that hurdle, at least through September.

One of the main advantages of COBRA is that you get to keep your current doctors and health-care providers. If you’ve already met your deductible for the year, maintaining your workplace insurance could be even more affordable compared with other plans, experts say.

Other insurance options for the unemployed include Medicaid and shopping for a plan on the Affordable Care Act’s marketplace.

Medicaid may make sense if you expect your financial troubles to remain for a long time and will also leave you with no monthly premiums.

Meanwhile, some jobless Americans may qualify for a free marketplace plan on the ACA, or Obamacare, exchange, after changes made in the most recent stimulus package. For example, if you collected unemployment insurance at all during the year, you can qualify for a free silver plan.

Not only won’t you have to pay a premium, but your out-of-pocket expenses may be minimal, too.

“As a result, a marketplace plan may be a better deal for you,” said Edwin Park, a research professor at the Georgetown University McCourt School of Public Policy.

Unfortunately, there’s not a good answer to this yet.

Currently, the government has not said it will offer people who take advantage of the COBRA subsidy a special enrollment period at the end of September, except in narrow circumstances. (Special enrollment periods allow people to sign up for health insurance plans on the marketplace outside of the normal window.)

Elected officials have written this month to the U.S. Department of Health and Human Services Secretary Xavier Becerra, asking him to create a special enrollment period when the subsidy expires.

If one is not established, they warn, “this will leave many consumers without a realistic option to find affordable coverage until the Open Enrollment Period for plans beginning in 2022.”

Running into issues accessing the new COBRA subsidy? Please email me at annie.nova@nbcuni.com