In February of this year Congress passed a measure to provide subsidies to newly laid-off workers to help to pay for COBRA coverage, which allows you to continue employer-based health insurance after leaving your job. Employers often pay 70 percent or more of the bill for insurance, so paying the full price (plus about two percent for administration costs) is quite expensive—more than $1,000 a month for families on average. The subsidies cover up to 65 percent of premiums, but they last only nine months and eligibility expires on Dec. 31st of this year. (For more on how to apply for the program, see Protect Your Medical Coverage.)
Those who started using the COBRA subsidy shortly after it was made available have already begun to see bills for the entire premium. And those who lose their job this month may not qualify for subsidies.
What should you do? If your subsidized COBRA insurance runs out and you can afford to pay the unsubsidized price—even if you have to stretch—try to do so. But you may not have to stretch, because it’s quite likely that the subsidy will be extended.
The House of Representatives passed a bill yesterday that would extend expired subsidies another six months to a total of 15 months, according to Business Insurance. And it would allow new claims for the subsidy to be filed by those who lose their jobs through February, 2010. (There is another bill in the works that would extend the eligibility period through the end of June, and a third that would raise the subsidy from 65 to 75 percent.)
If the subsidies aren’t extended by the end of the year, and you absolutely can’t afford COBRA without one, you might be in luck too. If the provision isn’t enacted by the end of the year, the House bill would give those who let their COBRA coverage lapse in December a second chance to continue coverage. They could use the 65 percent subsidy in January to pay their December premium. The extension is not a done deal—it still has to be considered by the Senate—but it could pass as soon as Saturday.It’s always best to keep your coverage if you can, especially if you have any medical conditions. If you let your insurance lapse for 63 days, you’ll no longer be eligible for continued coverage. That means you’ll be in the private insurance market until you can get coverage through employment again. If you do have health problems, in most states you could be denied due to preexisting conditions.
Passing health reform would help somewhat in the near term. A high-risk pool to cover those with pre-existing conditions would be set up until the insurance exchanges are put into effect. Reform would help even more in the long run. After the exchanges are implemented in either 2013 or 2014, you could shop for qualified plans and no one could deny you, or charge you more, because of a medical condition. And if you are unemployed then, you’ll likely qualify for subsidies to help pay for it.
—Kevin McCarthy, associate editor
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