Health Coverage for the Jobless Gets a Life Extension

Congress gave recently laid-off workers a holiday gift of sorts. Last week it extended a subsidy to help them pay health-insurance premiums. Part of a massive defense bill that passed Saturday, the provision extends the 65% subsidy for six months, for a total of 15 months, and expands eligibility for the program an additional two months -- through February 2010.Without the extension, many unemployed workers faced the prospect of paying much higher premiums or losing coverage all together if they couldn't afford the cost of the coverage, provided through the Consolidated Omnibus Budget Reconciliation Act of 1985.

Known as Cobra, the 1985 law allows workers to maintain their employer-sponsored health policy up to 18 months. But it requires recipients to pay the full premium, plus an administrative fee, to their former employer -- a cost that for many is just too high. In nine states, for example, monthly Cobra premiums for family coverage exceeded the amount received in unemployment compensation, according to a recent report from Families USA, a nonpartisan health care advocacy organization.

Nationally, the average monthly Cobra premium for family coverage is $1,111, consuming 83% of the average unemployment check, Families USA says. The subsidy reduces the premium amount to $389, freeing up money that can be spent on food, housing and other necessities.

14 Million Americans Are Eligible for Cobra

The American Recovery and Reinvestment Act, signed into law in February 2009, first introduced the subsidy, allowing newly unemployed workers to maintain their Cobra coverage at reduced rates beginning March 1 for up to nine months. That means workers who were eligible on March 1 have already seen their premiums rise effective with their Dec. 1 payment. If not for Saturday's extension, those who became eligible April 1 would have seen their premiums rise effective Jan. 1.

With the extension, those whose subsidy expired in December will likely see a refund or a credit toward future premiums, according to Families USA. Unemployed workers facing a Jan. 1 deadline will likely see their current subsidized amounts continue.

With unemployment at a 25-year high, more than 14 million people are eligible for subsidized Cobra, according to human-resources group Hewitt Consultants.

The Internal Revenue Service hasn't yet released figures for how many have taken advantage of the subsidy, but a recent survey of 200 large U.S. employers, conducted by Hewitt, showed that Cobra enrollment has doubled since the subsidy went into effect.

Enrollment in Cobra plans increased to 38% of those eligible between March and June, up from 19% for the period from September 2008 through February, prior to the federal stimulus bill's enactment, according to Hewitt.

Would the Health Care Reform Bill Help?

It also isn't known yet what, if any, benefits might be supplied near-term to laid-off workers in anticipated health care reform legislation, now being debated in the Senate. Coverage under that bill won't take effect at least until 2013, although it may provide additional funds to state pools for high-risk insurance to serve people with preexisting conditions and to reduce premiums for them.

The new legislation also extends the deadline for some jobless workers to receive unemployment benefits. In November, Congress extended the number of weeks workers could claim benefits to 73 from 53, but the benefits had to be used by June 30. The new bill extends that deadline until Aug. 31.
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