Many people in the U.S. get their health insurance through their work. As a result, a job loss results not only in the loss of income, but also in the loss of valuable health care benefits. Paying for health care is not just expensive; if you have a break in health coverage, it can be more difficult to get coverage down the road. In order to help alleviate this issue, and provide a transition for workers who lose their jobs, it is possible to use the COBRA program to get access to your company’s health plan. There are different conditions and time limits, however. Most employees can only take advantage of COBRA for up to 18 months.
One of the issues with COBRA, though, has been that you have to pay the whole premium, rather than getting part of it paid for by your employer. This can make COBRA unaffordable to those whose incomes have been diminished by a job loss. In order to help those suffering from job loss in the recent recession, Congress passed a 65% subsidy for laid off workers. This way, workers could receive assistance paying COBRA insurance premiums for 15 months while looking for work. The final three months were paid by the laid off employee. This subsidy expired on June 1, 2010 though, meaning that those laid off since the end of May do not have this subsidy. COBRA insurance is still available to those who want access to an employer health plan, but the subsidy is gone, after being extended more than once.
COBRA Subsidy Losing Support in Congress
The COBRA subsidy is not finding much support in Congress right now. It was part of a jobs bill in the House not too long ago, but without widespread support, it was removed from the legislation. The Senate, so far, has not even considered extending the subsidy as part of a jobs bill. Other efforts are underway to try and get the subsidy back, by extending it. Attaching the COBRA subsidy extension to another bill is extremely unlikely, so there is some talk of creating an entirely separate bill for the COBRA subsidy in the Senate.
The separate bill would allow for laid-off workers to receive help making COBRA payments for six months, retroactive back to June 1, 2010. However, even separate legislation that would pay for itself by getting rid of a tax break somewhere, is unlikely to pass. Legislators want to appear fiscally prudent, and many are concerned about the mounting federal deficit.
What Are Your Options with Cobra Insurance
If you have been laid off and want to avoid a breakage in health insurance coverage, you can still get COBRA. However, you may find that you premium goes higher without your employer picking up part of the tab. If you can still afford COBRA, that might be something to keep in the interim.
If you can’t afford COBRA insurance, consider your other options. There are web sites and insurance brokers that can help you compare health plans, and possible find an individual or family plan that costs less than COBRA — and it isn’t tied to your job. If you had a high deductible plan at your employer, and have been taking advantage of a Health Savings Account, you can tap this to help pay for costs. You can also check your savings accounts to see how much you have for medical expenses.
Paying for health care is always an expensive proposition, and with no more COBRA subsidies, and an extension unlikely, it is up to you to see what you can do until you find another job with health benefits.
This is a guest post. Miranda Marquit is a journalistically trained freelance writer and professional blogger working from home. She is a contributor for Mainstreet.com, Personal Dividends and several other sites. Miranda is not affiliated or endorsed by LPL Financial. The opinions voiced in this material are for general information and are not intended to provide specific advice and/or recommendations for any individual.
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I found out personally how much cobra costs. When I was working I paid about $200 a month for insurance and when I was laid of they expected me to come up with 900 a month. With the subsidy it was still 315 dollars. Luckily my wife was still employed.
For work plans having a spouse laid of is the same as having a baby or getting married. So we were able to start health insurance with her company without having to wait until November.
I wasn’t able to afford COBRA when I lost my job. The premiums were over full premiums were over $800 a month. When my husband started his own business we got a business survival kit subscription from sbo-online.org and it included medical, dental, vision and chiropractic benefits. It’s a discount program, but it way less expensive than $800 a month. We don’t have any serious illnesses or on lots for perscription medications so it works perfect for us. I know a lot of people in our situation can’t afford COBRA Insurance, but don’t think they have other options.
Before you immediately decide to decline COBRA and find a lower rate elsewhere, keep in mind that COBRA may be your -only- option if you have a pre-existing condition.
Individual plans are medically underwritten, while group plans (e.g., through an employer) are not. This means that individual plan providers can completely deny you coverage based on your medical history. For example, I had cancer in 2007 and was laid off in early 2009. I applied for individual insurance plans, but all outright denied me. A group plan (in my case, COBRA) was my only option.
The recent healthcare reform may change this issue in the coming years, but as far as I know, this situation is still applicable today.