The cornerstone American Recovery and Reinvestment Act, signed into law in February, contained a key provision to help the newly unemployed keep their employer-sponsored health-care plans. Most employees who lose their jobs can keep coverage for up to 18 months, under the Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985, but the cost is often prohibitive, because it requires recipients to pay the full premium, plus an administrative fee to their former employer.

Under ARRA, however, many recently laid-off workers could keep their plans, thanks to a 65 percent subsidy, paid to employers, that lasts up to nine months. That substantial discount has been a boon to jobless people who couldn't otherwise afford to keep health coverage. But the subsidy will end Dec. 1 for those who were enrolled March 1 when the lower payments first became effective, unless Congress acts to extend it.
The Internal Revenue Service has not yet released figures for how many have taken advantage of the subsidy, but a recent survey of 200 large U.S. employers, conducted by human-resources group Hewitt Consultants, showed that COBRA enrollment doubled since it went into effect. Enrollment in COBRA plans increased to 38 percent of those eligible between March and June, up from 19 percent for the period from September 2008 through February, prior to ARRA's enactment, according to Hewitt.

Unemployed workers who fail to pay the higher premium will lose their coverage, which raises numerous potential problems, especially for those with preexisting conditions who can expect to pay much higher rates in the open market or be denied coverage altogether. That's why it's key for those enrolled in COBRA to keep it, even at its higher cost, says Cheryl Fish-Parcham, deputy director of health policy at Families USA, a nonpartisan health-care advocacy organization. "People need to really find a way to [pay for] COBRA if they have pre-existing conditions," she says.

Fish-Parcham recognizes that for many recipients, that's not realistic, and hopes lawmakers will pay attention to the concern as they craft health-care overhaul legislation, an $829 billion version of which Tuesday the Senate Finance Committee will vote on.

Another benefit in maintaining COBRA coverage is that a recipient who remains unemployed after the 18-month coverage period expires becomes eligible for insurance under another federal program, the Health Insurance Portability and Accountability Act (HIPAA). Under HIPAA, Fish-Parcham says, "You have to be sold a certain designated individual policy ... regardless of any preexisting condition."

But consumers need to be careful, she says. "If you're just buying any policy and not the HIPAA-designated policy, there still may be preexisting-condition exclusions."

Few provisions in pending health-care overhaul legislation would provide for immediate coverage for those who either lack coverage or expect to lose it near-term. The bill being fashioned by the Senate Finance Committee would take effect in 2013.

That said, the Senate Finance Committee bill would immediately provide additional funds to state high-risk insurance pools to serve people with preexisting conditions and to reduce premiums for them, Fish-Parcham says. "But in terms of further tax credits or subsidies, those start later down the line."

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