Federal health insurance starts to expire for those who lost jobs

CHAMPAIGN — The financial misery for many Americans affected by recession job cuts took a turn for the worse this week, as a temporary helping hand from Uncle Sam to pay for health insurance began to expire.

The nine-month subsidy that helped people losing their jobs pay for extended coverage through their former employers’ health plans ran out Nov. 30 for the first people who began receiving it in March.

More people will lose this COBRA subsidy in succeeding months, and those losing their jobs after Dec. 31 won’t have any help with their COBRA costs at all, according to Families USA, a national health care consumer organization.

COBRA stands for the Consolidated Omnibus Budget Reconciliation Act of 1985, the legislation which created health insurance for workers that remains in effect for 18 months should they be terminated or laid off.

The subsidy, which provided 65 percent of COBRA coverage costs for unemployed workers to remain in their former employer health plans for nine months, was part of the economic stimulus bill passed by Congress in February.

People eligible for the subsidy have been those laid off or terminated between Sept. 1, 2008, and Dec. 31 of this year, with maximum annual incomes of $145,000 for individuals and $290,000 for families, and who also aren’t eligible for coverage under another group health plan or Medicare.

Workers losing this subsidy are on their own for extended COBRA coverage, but there’s a big catch, Ron Pollack, Families USA’s executive director, said Tuesday: They’re on the hook for the full cost of the coverage,plus a maximum 2 percent administrative fee.

“For somebody without a job, this is simply unaffordable,” Pollack said.

On average, unemployed workers with COBRA family coverage will see premiums grow from $389 to $1,111 a month as the nine-month subsidy ends, and the full COBRA cost will eat up 83 percent of the average monthly unemployment check.

In nine states — Alabama, Alaska, Arizona, Delaware, Florida, Louisiana, Mississippi, South Carolina and Tennessee — monthly family coverage under a COBRA plan will consume more than the average monthly unemployment checks, Pollack said.

In Illinois, the average COBRA family coverage ran $399 a month with the help of the government subsidy and will run $1,139 without it.

Families USA, which released a report on the expiration of the COBRA subsidy Tuesday, thinks millions of unemployed Americans and their families have been able to continue health coverage with the help of the COBRA subsidy. The U.S. Treasury is still compiling data that will show exactly how many people have received it, the organization said.

The subsidy “has been a lifeline that has allowed people to retain their COBRA coverage, and that lifeline is coming to an end,” Pollack said.

Families USA supports legislation introduced in the Senate last week to extend the COBRA subsidy at 75 percent of the COBRA plan cost for another six months, Pollack said.

By Debra Pressey 
The News-Gazette