COBRA coverage for unemployed may be extended

Doctor's examIf you lost your job, right now you can get a 65% subsidy from the government to help pay for a continuation of your health benefits under COBRA for nine months. The Consolidated Omnibus Budget Reconciliation Act may be a weird name for a bill about health insurance, but it's basically the law that requires companies to let people pay to remain on their group health insurance plans for at least 18 months.

But that could end shortly. Congress passed the 65% subsidy as unemployment rose in this country, but it's due to expire Dec. 31. A bill to extend the subsidy for a total of 15 months was introduced last week by Rep. Joe Sestak, D-Pa. Originally, the subsidy was available for nine months. So someone who began collecting the subsidiary on March 1 would run out of help at the end of November.
"Losing one's job is difficult enough," Sestak said in a statement when introducing the extension. "But losing one's health care along with it -- and worrying about being able to get treatment for oneself and one's family, or fearing bankruptcy in the event of injury or illness -- is something Americans should not have to cope with in this difficult time."

The subsidy has been very successful in helping people remain insured. A Hewitt Associates study released in August found that the percentage of laid-off employees opting for COBRA doubled to 38% after the subsidy was enacted. That still means 62% of the unemployed likely chose to go without health insurance unless they were able to switch to coverage under their spouse's employer.

Once COBRA coverage does run out, a person can get an individual plan. Some insurance companies do offer to extend the same coverage for a price close to the cost of COBRA. If that's not an option, there is a provision in the law called guaranteed issue, which means as long as you apply for continuing coverage, individual insurers cannot deny you for pre-existing conditions.

Unfortunately, I have found that guaranteed issue clause isn't as helpful as it may seem. When I lost COBRA three years ago, I got offers for insurance, but they were all $500 to $600 higher than my COBRA premium, which was already pretty high. Today even working with the Florida Small Business group, I find insurance unaffordable. My last quote was for $1,200 per month with a $3,000 deductible.

So I joined the ranks of the uninsured last year and took a supplemental plan through AARP that at least helps with some of my medical costs and gives me a certain dollar coverage per day if hospitalized. Sure, I'd feel better if I could afford full comprehensive coverage, but for people over 50, that's nearly impossible. It is extremely rare for people over 50 to be in perfect health. Most have preexisting health conditions. Even arthritis and controlled high blood pressure can put one on the uninsurable list today in many states when you try to get an individual health policy.

So if you do have preexisting conditions and want continuing coverage, do your best to come up with the funds to pay for your COBRA benefits until you find another job. Don't count on individual health insurance unless you are in perfect health.

Lita Epstein has written more than 25 books, including Surviving a Layoff: A Week-By-Week Guide to Getting Your Life Back Together.
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