COBRA Subsidy Subsides: Millions May Lose Insurance

By Tanya Roth, Esq. on December 02, 2009 | Last updated on March 21, 2019

The American Recovery and Reinvestment Act which included a COBRA subsidy to help laid off workers afford health insurance. That COBRA subsidy begins to expire today. These payments were designed to last nine months for unemployed workers, so those who joined the unemployment rolls in March stand to lose their COBRA subsidy starting today. As of October, an estimated 15.7 million Americans were out of work. 

COBRA, which stands for the 1985 Consolidated Omnibus Budget Reconciliation Act, is the plan which allows an unemployed worker to continue to purchase health insurance through their former employer's plan. As Americans are painfully aware, the cost of COBRA can be prohibitive, even when workers are not forced to live off of unemployment insurance checks. If that is the case, as it is with so many now, without the current COBRA subsidy, the costs become astronomical.

The advocacy group Families USA, says that without the current subsidy, COBRA payments would consume more than 83% of the average unemployment check. The LA Times reports that in California, a state with a 12.5 unemployment rate, the average monthly COBRA payment for a family plan is about 82% of the family's monthly check. In nine other states, a COBRA premium exceeds the average unemployment check.

Although lawmakers in both houses of Congress have proposals pending to extend the COBRA subsidy for another 6 months, the bills have not yet been cleared out of committee nor fast-tracked in a way that would enable workers to continue to receive their subsidies without a break. A dreary note was struck by Martin Rosen, a co-founder of Health Advocate, Inc. "You don't want to have a false sense of security. People need to prepare."

If you are healthy, you might be able to purchase health insurance on the open market. If that is not an option, Rosen shares a few tricks that might help workers out until things improve. He suggests enrolling in a spouse's plan (if your spouse is fortunate enough to be employed), or piggy-backing off a student health plan if you have a child in college. Rosen notes that student health care is far from ideal, but better than nothing. Finally, he suggests seeking part-time work with companies generous enough to give health benefits to their part time employees such as Cost-Co, Trader Joe's and Starbucks. 

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