Many jobless workers may soon lose COBRA subsidy
Filed under: Economy, Healthcare
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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Reader Comments (Page 1 of 6)
10-09-2009 @ 1:50PM
Sean said...
Gee, I hope none of the "death panel" morons lose their coverage. That would be a crying shame. But, the irony would be sweet.
Reply
10-09-2009 @ 10:00PM
JOHN said...
YOU ARE A SELF CENTERED A-HOLE. IT IS PEOPLE LIKE YOU THAT WHEN A MEDICAL CRISIS HITS THEM THEY COME RUNNING TO ME TO APPROVE FINANCIAL HELP WITH THE HOSPITAL BILL FROM THE GOVERNMENT. I WOULD LIKE YOU TO GIVE YOUR NAME SO I CAN PUT IT ON THE LIST TO HAVE AUTOMATICALLY DENIED.
10-10-2009 @ 5:05PM
mickey said...
John, you have been indoctrinated well. You seem bent on destroying people's lives, literally. God help us that you have been put in that position. Don't forget, you will also meet your maker. I'd love to be a fly on the wall that day.
10-09-2009 @ 1:58PM
MyKisa said...
....gee, I hope Americans can force their government to step aside....there are only a coupld of hundred of these freaks destroying us
Reply
10-10-2009 @ 4:09AM
ycav4424 said...
For sure, and half of those couple of hundred have to be concerned with what they have been doing legally. So it would be a sad deal if a hundred people could take over and completly trash our forefathers system. It looks like they are giving it the good ole college try. The few can't take possesion of our America if the millions don't let them. Speak up, insist on the truth and accountability. We deserve it.
10-09-2009 @ 2:10PM
Patty said...
I lost my Cobra coverage because the company closed. Sucks!
Reply
10-09-2009 @ 2:17PM
Jerry said...
Yer, sure thing the Government is concerned with those who are unemployed. My COBRA coverage ran out just as i turned 65, so i am covered by Medicare, but my wife, not 65 yet, used the 18 month program til it ended and her Premium for a HIPPA policy with Blue Cross Blue Shield went from $447.00 a month to $974.00 a month just for her. Yes, she is unemployed as she is an only daughter taking care of her 86 yr old mother who has Dementia. But come on now, how many people can afford $1,000 a month for insurance that comes out of their own pocket every month? This is our Obama Government taking care of bringing down prices of Insurance by making it more competitive? Oh, she applied to several other companies, she was rejected by all because she has type 2 Diabetes and even though her doctor sent a letter to each compnay stating her Dioabetes was 100% under control and he would nopw classify her as cured, they would not touh her insurance except at this price of $1,000 a month. Oh, and that has a $5,000 out of pocket deductible also, just for her. So much for Obama and his interest in reducing insurance for teh unemployed.
Reply
10-09-2009 @ 2:26PM
PJD120 said...
That is what I'm trying to understand Jerry. How can someone afford to pay what your wife pay and are unemployed. So now since her cobra is ending, she has to pay an additional $500.00 per month for her insurance? I keep telling my husband that the government isn't going to see anything until they start seeing all Americans sitting on a curb somewhere.
10-09-2009 @ 2:48PM
M said...
They offered me Cobra at a little over $500 a month! I laughed because I thought that was outrageous. No one can afford that if they are not working.
10-09-2009 @ 3:06PM
Luvly52 said...
Why is it that everyone wants to blame Obama for the misfortunes of this country? He did not cause this problem. The man has only been in office for a short while and you all expect for him to perform miracles! Place blame squarely on the shoulders of the man who really should have fixed alot of the problems we have in the U.S. BUSH!! I have parents who, too, are on a fixed income and I know what they deal with what with the high cost of health care. They are on meds too but they are not blaming Obama due to the severe health care crisis. They take it in stride and live their lives. I am currently unemployed and have been so for nearly 10 months now and am about to lose my subsidy for COBRA. I am single and sole supporting and I am not on meds but just the same, I too, must contend with the high cost of health care. Stop always blaming Obama for your troubles and look to God for your answers. This man has taken so much flack since taking office and it is simply not fair to him or his family. He is working diligently to change things for this country and it is going to take some time. This may sound cliche` but Rome was not built in a day. Give him a break! God bless you.
10-09-2009 @ 4:14PM
Linda said...
I was laid off from my job fourteen months ago. I pay 569.16 a month for Cobra coverage to my former employer. My husband has a private plan with the same coverage and same insurer at a cost of 564.16 per month. He turned 50 and it went up to $699 per month and he just received notice that BC rates are increasing 25%. His next months premium will be $873.75 with a $2k deductible. I have MS and can not get coverage on my own, he has never even had a claim filed with BC. When Cobra runs out, I have no where to turn. I was opposed to Obama care and am still very skeptical of the whole thing, but what else is there? Obama won't mandate insurance companies to lower cost in line with the GDP or middle class wages, so I am faced with no other options than a government run healthcare plan. I don't like it, don't want it and I'm certain that it will cost just as much. I feel like they (insurer's) have already pulled the plug our healthcare coverage. Who can afford this on a single income.
10-09-2009 @ 4:42PM
David S. said...
This had nothing to do with Obama. That is the private health care world as we know it! The one conservatives love and support. They can charge whatever premiums they want -- obviously based on your wife's age and pre-existing conditions. Obama has passed no health care bills....
10-09-2009 @ 4:49PM
Larry said...
Get real. You think this is all Obamas fault? How do you think we got into this mess??? Now you sit around all messed up by 8 years of republican rule and act like you had no clue about this....You're not fooling anybody, you didn't vote or Obama and you couldn't wait to use any excuse to blame him...he's trying to repair this bush fiasco and the green in your eyes is blinded my your unbridled hate for a Black president...Deal with it... the days of the old boys network is a thing of the past.
10-09-2009 @ 9:16PM
Richard McCarthy said...
Well, Jerry, if the Resnublicans weren't blocking Obama at every turn, we would ALL have coverage by now.
10-09-2009 @ 9:26PM
ssshhhh34 said...
Your argument completely supports government health care. Don't argue how our health care system sucks now and pin it on Obama. Obama's plan hasn't even went to congress genius.
10-09-2009 @ 11:55PM
citizen said...
That is a perfect example of why the health care system needs reform. It is not working now and needs to be fixed.
10-10-2009 @ 11:17PM
D. said...
Jerry,
Obama wanted to sign off on a healthcare plan a long
time ago, however the Republicans and some Democrats
can't seem to come to an agreement. The unfortunate thing is that while we wait for them to make a decision, our lives
and those of our loved ones are hanging in the balance.
10-09-2009 @ 2:18PM
biker chick said...
It's because of this COBRA subsidy that my company refuses to lay anyone off. It's cheaper for them to cut everyone else's wages and hours than it is to lay people off. So we all have to get our throats cut.
Reply
10-09-2009 @ 2:34PM
Anon said...
You are an idiot, the COBRA subsidy does not cost your company.
10-09-2009 @ 3:38PM
joey said...
YOU pay the COBRA coverage not your employer, no wonder your out of work for being ignorant