What to do now that the COBRA subsidy is ending
Will they or won’t they extend the COBRA subsidy? That’s the question as the nine-month benefit begins to expire.
The subsidy, established by the Obama administration earlier this year for people who lost their jobs, and with it their employer-based health insurance, has helped millions pay for the cost of extending that insurance.
COBRA, which stands for the Consolidated Omnibus Budget Reconciliation Act, has long enabled many people who lose their job to keep their insurance, at 102% of the cost. But such coverage is expensive, and many people ultimately can’t afford it. With so many Americans unemployed at once, the subsidy was deemed necessary to prevent the percentage of uninsured Americans from growing dramatically at once.
It was launched in March and paid 65% of the health insurance premium cost for workers laid off between Sept. 1, 2008, and Dec. 31, 2009 -- saving families an average of $722 per month on average health insurance premiums of $1,111.
“At this point I’d only give it 50/50 that it will be renewed,” says Ron Pollock, president of the Washington, D.C., advocacy group FamiliesUSA.
People who lose their jobs after Dec. 31 of this year will receive no COBRA subsidy. But the immediate concern is for the tens of thousands of people who qualified for the subsidy’s debut on March 1 and, with the assistance over, now can’t afford the December premium.
“The best idea for people losing the subsidy right now would be to pay the higher December premium fee,” says Cheryl Fish-Parcham, deputy director of health policy at FamiliesUSA. That would give consumers a month to search out new options and decide whether COBRA coverage is too expensive without the government’s financial assistance.
Fish-Parcham also advises people to check their policy to see when the premium is due. “You do have a 30-day grace period each month to pay your bill, but after that period, your insurance will be canceled. The premium is likely less expensive than anything else you’ll find on your own, with the same level of coverage.”
If you can’t afford the full pre- mium, consider keeping just yourself covered -- if you can get the rest of the family covered elsewhere. A spouse may have insurance options through his or her employer, and children might be eligible for insurance through the Children’s Health Insurance Plan in your area. In California, the program is called Healthy Families. Call (800) 880-5305 or go to www.healthyfamilies.ca.gov. Click “contact HFP” at the bottom of the home page for information about applying for the program.
If your spouse is not covered by an employer, keeping COBRA coverage for just the two of you will still be cheaper than using that option for the whole family, if the chidlren can be insured through a state program.
Whatever you do, don’t wait until you get a notice from your health insurance carrier that you’ve missed your payment, Fish-Parcham says. At that point, it may be too late -- you may already have lost coverage.
It may be possible to find comparable, or even slightly less- expensive, plans at sites such as www.ehealthinsurance.com, the largest online health insurance broker. And FamiliesUSA offers a state guide to finding health insurance at www.familiesusa.com. Click on “Resources for Consumers” to the left of the home page and then click “California” or another state.
The California Healthcare Foun- dation also offers health insurance information on its site, much of it specific to California residents. Go to www.chcf.org and click “consumer resources” to the left of the home page.
But we won’t sugarcoat the reality. COBRA coverage, despite its high cost, is often the least-expensive option.
Take care
And if you have, or might have, medical debt . . .
Here’s another valuable resource from FamiliesUSA. The group recently released a consumer’s guide to coping with medical debt. Go to www.familiesusa.com, click “Resources for Consumers” to the left of the home page, and then “Your Medical Bills: A Consumer’s Guide to Coping With Medical Debt.”
In 2007, 41% of working adults had trouble paying medical bills, were paying off medical debt or both, Pollock says.
The guide is a valuable one even for people facing stiff bills but not currently in debt. It offers advice for reviewing and challenging a medical bill, and offers information on what your rights are if you cannot afford to pay your bills.
One note from the guide: Don’t take a second mortgage to pay off medical debt. A medical debt is unsecured, meaning the creditor cannot take your property in order to get their money. A second mortgage turns the debt into a secured one -- and you run the risk of losing your house if you don’t make the payments.
