Merry Christmas, unemployed: COBRA help extended through February

Early Saturday morning the Senate gave unemployed persons a Christmas gift. Through a trick in legislation, unemployment benefits were extended for the long-term unemployed who were slated to lose those benefits December 31. The Senate bill also provides up to 15 months of help with health insurance benefits through COBRA subsidies. Without the legislation benefits would have ended for any unemployed who already received nine months of help with their health insurance benefits on December 31.

The House of Representatives approved a six-month extension for a total of 15 months of COBRA benefits last week, so now the legislation is ready to go to the President's desk for signature.

In order to get the legislation through the Senate, Democrats had to use a trick. They attached the extension to the must-pass 2010 defense appropriations bill.

Congress in November increased the number of weeks a worker could claim unemployment benefits from 53 to 73, but the weeks had to be used by June 30, 2010. The new bill allows workers to use the weeks until Aug. 31, 2010. The deadline to apply for both federal benefits was Dec. 31, but was reset to Feb. 28 of next year. This is a short term Band-Aid. Several Democratic congressional leaders hope that additional extensions for the unemployed will be passed next year.

Now that the bill has passed both houses of Congress, the unemployed can count on the COBRA subsidy of 65% for an additional six months for a total of 15 months. Without that subsidy families would need to spend hundreds of dollars they can't afford to continue their health insurance coverage.

While a company must provide continuing health insurance for 18 months, and in some cases up to 36 months, for a person who has been laid off plus his family members, the company is not required to foot the bill. In fact it can charge 102%, which includes 100% of the premiums plus 2% for an administrative fee.

For example, if the insurance premium for the family is $900, the government will pay $585 and the family will have to pay $315. Prior to this help, insurance premiums could eat up 84% of the average monthly unemployment benefit, according to the nonprofit group Families USA. In its 2009 report, Families USA found that in nine states, COBRA premiums exceeded unemployment compensation. Because of its price, many people can't afford to take advantage of the COBRA safety net.

Health insurance costs are determined on a state-by-state and company-by-company basis, so the value of the government's help depends upon the health insurance premium your company actually pays for you and your family. Most people pay only a small percentage of the cost of their health insurance coverage from their employer and have no idea what it would cost if they had to pay the entire premium. The actual insurance premium will depend on what your company has negotiated with the insurance company that carries its health insurance benefits.

Lita Epstein has written more than 25 books including Surviving a Layoff: A Week-by-Week Guide to Getting Your Life Back Together and Working After Retirement for Dummies.
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