Tuesday, June 8, 2010

Laid-off workers lose COBRA health subsidy

WASHINGTON — Howard Kornblum has been watching every penny for the past 15 months, and it's about to get worse.
After being laid off from his job as a consulting director in Michigan, he took advantage in March 2009 of a federal subsidy to help pay for health insurance. With the government picking up 65 percent of the tab, Kornblum's share of the premiums was $236 a month.

Last Tuesday, the subsidy expired for the first people who got it, and Kornblum's benefits ended Friday.

Under the federal COBRA law, a laid-off worker can stay on his employer's plan for 18 months, but the employee must pay the entire cost of the coverage. The COBRA subsidy — initially part of the 2009 stimulus package — provided the funding for 15 months for people who lost their jobs.

A U.S. Treasury study found that up to a third of eligible unemployed workers took advantage of the benefit. The average cost of a family plan is more than $13,000 annually — not affordable on an unemployment check. The Obama administration estimates that 500,000 workers each month since March 2009 who lost their jobs were eligible for the COBRA subsidy, said Sandra Salstrom, a Treasury spokeswoman.

Extension is unlikely

Some might consider Kornblum one of the lucky ones. Starting this month, the newly unemployed aren't eligible to get the subsidy at all. The proposal to extend subsidies to those who get laid off through the end of the year is languishing in Congress, a casualty of worries about the federal budget deficit in an election year.

Congress has extended the subsidies four times since February 2009, but the latest effort stalled before the Memorial Day recess. Congress may consider extending them again when members return this week, but it's unclear how long such a proposal would take to make its way through and what support there would be for it.

So the unemployed may pay more to remain on COBRA without subsidies, look for insurance on the individual market, go on Medicaid if they qualify or lose coverage altogether. That could further tax a health-care system that's already struggling to keep up with the number of uninsured.

Some who have expiring COBRA coverage or didn't get the benefit could be eligible to join existing state high-risk pools or soon-to-be-launched federal high-risk pools, but the federal pools require participants to have pre-existing conditions and to have been uninsured for six months.

State option

Karyn Schwartz, a senior policy analyst with the Kaiser Family Foundation, said some people who continued their COBRA coverage might have another option: a state "HIPAA-eligible" plan.

Each state offers one for people with pre-existing conditions whose coverage on COBRA has expired, but the premiums are often very expensive, and people must meet exacting criteria to qualify: They must have had COBRA for 18 months, have been covered the entire time, have pre-existing conditions that would preclude them from getting other coverage and be able to pay the higher premiums such plans would charge. Many people may not be able to meet such a high threshold.

Kaiser Health News is an editorially independent news service and a program of the Kaiser Family Foundation, a nonpartisan health-care policy organization that isn't affiliated with Kaiser Permanente.

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