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Sunday, January 3, 2010

Americans in another bind

Erin Kelly

Staff Writer

A lifeline has just been yanked out from underneath many Americans and their families.

According to a new report from Families USA, beginning December 1st, more and more people will face a crushing financial burden-and are likely to join the ranks of the uninsured-as subsidies for COBRA coverage begin to expire.

COBRA gives laid-off workers the right to remain in their former employer's group health coverage, and last winter's American Recovery and Reinvestment Act (ARRA) offered subsidies so they could afford to exercise this right. The report notes that,

Normally, COBRA guarantees 18 months of continued coverage . . .  but the former worker must pay the full premium-both the employee share and the employer share-plus a small administrative fee. Under ARRA, these COBRA-eligible workers receive help paying for coverage for part of that period: they are eligible for a federal subsidy that pays 65 percent of the cost of their monthly COBRA premiums for up to nine months.

For those who began receiving the subsidy in March, when it began, the nine months ran out on December 1st. As a result,  

On average, these unemployed families will see their premiums increase from $389 per month to $1,111 per month, an amount that few long-term unemployed families will be able to afford. Monthly premiums of $1,111 would consume 83.4 percent of the average unemployment check, leaving little or nothing for food, housing, and other necessities.

Many, if not most, of those losing subsidies will probably decide they have to drop their COBRA coverage. They are likely to become uninsured.

Without health reform, problems like these will become all too common. And, until health reform is enacted, this temporary subsidy should be extended.