PROVIDENCE — Buried deep within the immense federal stimulus package is a provision that could make health-insurance coverage more affordable for thousands of Rhode Island’s newly jobless.

The plan calls for a 65-percent subsidy on COBRA, the federal law that allows laid-off workers to purchase group health benefits through their former employer.

Starting immediately, employees who lost their jobs after Sept. 1, 2008, can partake of the subsidy for up to nine months. Eligible workers who did not originally opt to pay for COBRA may also sign up for the subsidized version within 60 days.

For the 10 percent of Rhode Islanders who are unemployed and struggling to pay bills while continuing health coverage, that is welcome relief.

A new study by the New York-based Commonwealth Fund found that nationwide only 9 percent of laid-off workers partake in Consolidated Omnibus Budget Reconciliation Act (COBRA) coverage though their old job, in part because it can be prohibitively expensive.

On average, a family insurance plan purchased through an employer costs more than $1,000 a month, according to Rhode Island Health Insurance Commissioner Christopher Koller. A single person’s plan is about $400 a month. When you are employed, the bulk of that money is paid for by your employer. But COBRA recipients are responsible for paying the entire premium, plus a 2-percent administrative fee.

“A lot of people get sticker shock. They see that number and they say that’s just not affordable,” said Robert Calise, principal at West Warwick-based Cornerstone Group, which administers health-insurance programs for 900 Rhode Island companies.

Under the stimulus plan signed into law by President Obama this week, the federal government will subsidize that cost, leaving laid-off workers to pay, on average, about $350 per month for a family plan and around $150 for a single plan. The employer will cover the difference between the subsidy and the full premium and will be compensated by the Treasury through a tax credit.

“This was a very important piece of the stimulus package,” said Lt. Gov. Elizabeth Roberts, who has worked extensively on health-care issues. “When people become unemployed, they lose their income, but for many, the more pressing concern is that they lose their health insurance.”

Those who qualify for the subsidy include individuals who were involuntarily terminated between Sept. 1, 2008, and Dec. 31, 2009, and have a gross adjusted income of less than $250,000 a year for a family and $125,000 a year for a single person.

Eligible recipients must also have been enrolled in health-care coverage at the time of their job loss and the company or organization they worked for must continue to exist today. Participants are allowed to purchase COBRA benefits for up to 18 months, though the federal subsidy only lasts for nine months, ending earlier if they become eligible for another kind of group coverage.

COBRA subsidies are not retroactive. The subsidized rates only exist going forward.

Calise predicts that the deep discounts will drive hundreds if not thousands of Rhode Island’s jobless “to hop onto COBRA at least for the nine months that the subsidy is in place,” he said. “But for those who still need coverage after nine months when the subsidy disappears, I think you will see people drop off because it will become unaffordable again.”

For now, Koller says, the stimulus will offer a big assist for the unemployed as well as for providers. Fewer uninsured Rhode Islanders means less uncompensated care, which is good for the health-care system as a whole, he notes.

The challenge, as the health insurance commissioner sees it, will be in effectively administering the program.

An influx of participants will require vigilance on the part of employers in keeping former workers apprised of their option to continue coverage, including alerting them to the new government subsidy and notifying insurers who is partaking of coverage. Failure to constantly update the insurer can result in termination of coverage, which can be hard to undo, Koller said.

Even with the subsidy, COBRA still might not be the cheapest insurance option for certain people. Rhode Island, along with several other states, allows some unemployed, as well as those who do not receive health benefits though their job and do not qualify for Medicaid or Medicare, to directly purchase insurance from a major insurer, Koller explains. For low-wage earners, particularly those who are young and healthy, that route could be more cost-effective.

Before the stimulus subsidy became law, Roberts helped craft legislation that would allow the unemployed to purchase RIte Care insurance out of pocket, meaning it would cost the state no money. That bill is now making its way through the General Assembly along with several others like it.

For more information about the federal COBRA subsidy, contact your employer, or former employer, directly. Do not go through the state’s unemployment office. Answers to frequently asked COBRA questions and an outline of the federal stimulus policy is also available in a link from the Rhode Island Health Insurance Commissioner’s Web site at www.ohic.ri.gov/Employers%20FAQS.php. Scroll to the bottom of the page and click on COBRA Premium Subsidy.

cneedham@projo.com