Health Insurance for Unemployed Workers
Cobra Coverage Made Possible by the 2009 Stimulus
Mar 25, 2009
This article reviews M.P. McQueen's February 19, 2009 article for the Wall Street Journal.
Cost of Cobra
Cobra, as described by the U.S. Department of Labor, is an acronym for the Consolidated Omnibus Budget Reconciliation Act (COBRA). It lets employees who have lost their employment pay for their employment for a period of time, without their employers contribution to the plan.
This is important at a time when unemployment has risen nearly three points from its levels a year earlier.
With the new government subsidy from the stimulus package, 65% of the premium will now be covered for people who qualify. Previously, subscribers had to pay 102% of the premium.
Qualifications for the Cobra Subsidy
In order to receive the reduced premium for Cobra, individuals must:
- have been terminated between Sept. 1, 2008 and Dec. 31, 2009
- earn an income less than $120,000 annually for single people and less than $250,000 for married couples
Cobra insurance generally does not extend to companies which have 20 employees or less, although many states extend these benefits to those companies. Also, if a company was liquidated or an employer never offered health insurace, Cobra insurance does not apply.
Pre-existing Conditions and Cobra
The Health Insurance Portability and Accountability Act of 1996 makes it difficult for health insurers to deny coverage to a person due to a pre-existing condition. However, this protection only applies if that person has been continuously covered by a health insurer, with a break no longer than 63 days.
Switching to a Less Expensive Health Plan
Another provision of the stimulus now permits workers who have been laid off to switch to less expensive health care plans under Cobra if they are offered by their employer. Older versions of Cobra had required employees to wait until the open enrollment period.
Alternatives to Cobra
Cobra remains an expensive option for health coverage for most Americans. Those who are younger and healthier may elect to take an individual insurance policy from such companies as Aetna.
Websites which offer information on public and private health insurance plans include:
- www.coverageforall.org, from the Foundation for Health Coverage Education
- www.nahu.org, a website funded by the health insurance industry
- www.ehealthinsurance.com offers comparisons for individual health insurance plans
Experts in the field advise those who have lost their job to apply immediately for an individual health insurance plan, as the process may take weeks or months to move through underwriting.
However, for those who are pregnant or have a pre-existing condition, Cobra may be the only option for health insurance.
