What Happens When the Cost of COBRA Rises?
Since 1985, many laid off workers have been protected by the Consolidated Omnibus Budget Reconciliation Act (COBRA). COBRA allows workers the option of keeping the health insurance coverage they had while employed for up to 18 months, as long as they can pay the full amount of the premium.
According to the Kaiser Family Foundation, a not-for-profit foundation focusing on major health care issues, the number of people taking advantage of COBRA is not available. But one study implies that only 19% of eligible people were using COBRA in early 2009. Because employer-sponsored programs cover on average 83% of health insurance premiums, individuals who find themselves laid off have the double-edged burden of a fourfold increase in their health care costs and the loss of their incomes. It is not at all surprising that so few people choose to continue their coverage.
Last March, as a part of the economic stimulus package known as the American Recovery and Reinvestment Act of 2009 (ARRA), the federal government began offering substantial subsidies to help laid off workers pay their COBRA health insurance premiums for nine months. The package offers unemployed workers a 65% discount in the cost of their premiums. The program has proven effective in that Kaiser estimates that twice as many eligible people are keeping their health insurance benefits.
Those who were among the first to apply for the ARRA subsidies are coming to the end of their eligibility for the federal discount. And eligibility to begin receiving the discount is ending in two months. While congress is considering a bill to extend the subsidies, many people are finding themselves in a difficult situation. Should they stay on COBRA even though their costs may skyrocket, or should they seek other less expensive options?
An article by M.P. McQueen in today’s Wall Street Journal quotes one human resources expert who advises that participants should remain on COBRA if they can afford it especially if they or their dependents have any pre-existing conditions. For others, Mr. McQueen exploring their options by comparison shopping for private health insurance plans.
If you find yourself in such a situation, GetInsured.com is a great place to explore your options. Knowledgeable and helpful associates will listen to your situation and provide you with easy to use information about private health plans to meet your health needs as well as your budget.
Posted on Monday, November 9th, 2009 at 10:00 pm. You can subscribe via RSS 2.0 feed to this post's comments. You can comment below. Your comments will appear immediately, but the author reserves the right to delete innapropriate comments.
Thursday, February 4th, 2010 at 2:59 pm
What most people don’t relize is that the premiums that they are charged when going on COBRA are the premiums that the employer was paying origanaly. Now, most employer’s pay a percentage of the premium (normally 50% or more).
If you want to know what insurance premiums will be like when they pass health care reform, take a look at COBRA premiums. See, group health insurance companies can’t decline someone for coverage, and that is what they are wanting privite insurers to do. No declines mean everyones insurance goes up…way up.