COBRA Health Coverage in a Bad Economy
We aren’t talking about cobra as in snake slithering through the grass here, though that imagery is being splashed across the media as COBRA reveals its true colors in the face of this economic crisis the United States finds itself in. COBRA, or Consolidated Omnibus Budget Reconciliation Act, was created back in 1985 to help Americans who lost their jobs to maintain the health care that had been provided through their employer.
According to medheadlines.com, COBRA says the worker can keep coverage for as long as 18 months after employment is terminated but the worker must foot the complete bill. When employed, the worker paid the worker’s share of the health coverage bill and the employer paid the rest. Under COBRA, the now-jobless worker pays both the employer and employee shares of the coverage. But as many of the nation’s unemployed are finding out, the program’s promises are far from being met.
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COBRA’s Lack of Insurance Relief
It really does sound like a good deal - you are able to hold on to the health insurance plan you have grown accustomed to under your previous employer to keep you and your family healthy while you search for a new job. I’m sure that people who are looking to start COBRA coverage aren’t assuming that they will get coverage at the same copay prices that they were paying while employed, but the realities around how much things do end up costing are pretty grim.
Families USA, an advocacy group that is devoted to improved health care for all Americans, says that one average worker ends up needing to devote 30% of their unemployment money per month to keeping their health insurance coverage through COBRA. For families, that number soars to 84% of unemployment funds. If you consider all of the other bills an average family faces in a month, like rent or mortgage, utilities, not to mention basics like food, it makes you wonder about the ridiculous price tag being put on health.
A good example of how hard people are being hit is that of a Minnesota woman who has recently found herself unemployed. Her husband is self employed, and she is getting $1,612 every month from unemployment. For her to keep her health insurance through COBRA costs $1,200. We can only hope that her husband makes enough in his business to help keep them afloat, because $400 a month for two people to live on is laughable.
Some States Harder Hit than Others
As bizarre as this sounds, the woman in Minnesota is actually better off than others around the country. What if you happen to live in a state whose unemployment payouts per month are less than what you would need to pay for COBRA insurance coverage? In Arizona, the average unemployment check is $937 per month. The cost per month for a COBRA premium for a family? $1,084. If both parents find themselves unemployed or even if one remains employed at a job with no health benefits, the COBRA coverage is simply unattainable.
The Kaiser Family Foundation and Health Research and Educational Trust says 80% of America’s workforce eligible for COBRA coverage doesn’t take advantage of the program. Is this at all surprising? Why would people want to try and keep their coverage, no matter how outstanding it might be, if it means that they can’t pay their mortgage or put food on the table? It is probably an agonizing choice to make for a family-deciding to do away with health insurance and care. If you find yourself in this situation, please don’t despair. Visit our health insurance for the unemployed section to find out about your options, and don’t get COBRA bite you like it has so many others.
photo credit: SkilliShots
Tags: COBRA, cobra stimulus, consolidated omnibus budget reconciliation act, economic recovery, health coverage for the unemployed, unemployment
March 3rd, 2009 at 1:47 pm
[...] the stimulus package’s COBRA subsidy. We have also extensively covered this subject in “COBRA Health Coverage in a Bad Economy” and “Stimulus Package and COBRA Health [...]
March 23rd, 2009 at 11:59 pm
Yeah, the whole system about health insurance is seriously in need of a change, especially when unemployment benefits are less than health insurance bills.
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