March 3, 2009 
With all the layoffs these days, this is a real issue that many people are facing. According to the Kaiser Family Foundation, the average premiums for 2008 were:
|
Worker Contribution |
Employer Contribution |
Total |
|
|
Single |
$721 |
$3,983 |
$4,704 |
|
Family |
$3,354 |
$9,325 |
$12,679 |
COBRA allows laid workers to continue their former health insurance for up to 18 months at the full cost plus a 2% administrative fee. That’s approximately $400 for an individual per month or over $1,000 for a family per month. For many people, these amounts eat up a large amount of their monthly income from unemployment or severance or savings so it becomes a tough decision.
I guess a ray of good news is that in the “stimulus package” people will have 65% of their COBRA premiums subsidized if they were laid off between 9/1/08 and 12/31/09. (Remember that you have 60 days to sign up for COBRA after you receive a notice from your employer about eligibility…which should happen shortly after you lose your job.)
Your other option is to go to your health insurer or someplace like eHealthInsurance.com to buy an individual policy. Most health plans now offer an individual plan although they don’t do a good job of selling it to people leaving the plan. The subsidy may change the economics a little, but my understanding is that it is generally less expensive to get the individual insurance than COBRA. BUT, I have two caveats:
- Several company have announced large increases in their premiums for their individual plans (as much as 30%+). These will be tough for a lot of people to swallow.
- If you have a pre-existing condition, don’t drop your COBRA until you have found another plan.
As long as you are continuously covered, insurers can’t deny you coverage under the Health Insurance Portability and Accountability Act (my understanding and stated in a USA Today article on this topic).
What I do think is unreasonable is that when you lose your job, you have to stay with the same plan under COBRA. You can’t switch to a lower cost plan that your employer might have offered. Why shouldn’t you be able to? Now, USA Today says that if you’re eligible for the subsidy then your employer might let you switch – why now…is the employer paying for the subsidy?
Enabling Healthy Decisions 
Millions of Americans who lost their jobs prior to September 1, 2008 could not afford Cobra. Millions more elected Cobra but have now depleted their resources and can not continue on. Still millions more with pre-existing conditions who rely on cobra to bridge the 18 month gap between their former employers insurance and their state’s high risk insurance pools are struggling to pay their premiums every month to prevent being locked out of insurance permanently.
Please join us in asking Congress and the Obama administration to eliminate the arbitrary September 1, 2008 cut-off date and 9 month limitation of assistance by signing our petition at http://www.ipetitions.com/petition/cobrareform and telling your friends about our efforts.
For more information please see our website at http://cobrareform.weebly.com.