Health Law Preserves Cobra Plan
By Walecia Konrad, April 2
If you’ve recently joined the ranks of the unemployed or are worried that you soon will, you may be wondering if the sweeping new health law will help you. Will you, for instance, still be able to get health insurance under the government-mandated Cobra program? If so, for how long? And at what price?
“Basically the version of the health law that passed leaves Cobra coverage the way it always was, no changes,” said Kathryn L. Bakich, national health care compliance director for the Segal Company, a benefits consultant. But other aspects of the law may provide a little bit of relief for people who can’t afford or are no longer eligible for Cobra, she added.
Here’s where the confusion comes in: coverage under Cobra benefits expires after 18 months. In the House version of the health overhaul, Cobra benefits would have been extended until 2014, when many of the new, state-run health care exchanges, or marketplaces, would be up and running. But the Senate bill, which is the version that was signed into law, included nothing about extending Cobra.
For years, Cobra acted as a bridge for people who were laid off or voluntarily left their jobs until they could find another position, and presumably, another employer-sponsored group health plan to join.
But with the nation’s high unemployment rate, more and more workers are finding themselves out of work long enough for Cobra benefits to expire.
That’s what’s happening to Jan Lipert of Bayonne, N.J. Laid off from her print shop job in February 2008, her Cobra coverage expired on March 31. Soon her unemployment benefits will end as well. Ms. Lipert is 62, so she won’t be eligible for Medicare for three more years. She will receive a small payment soon from her former husband’s Social Security benefits, and she is looking for part-time work. Now that she has no health insurance, she is hoping she will be eligible for medical care at the community clinics in her area. “I’m one of those people who is totally in the gap,” Ms. Lipert said. “I’m glad health reform passed, believe me, but it doesn’t really help someone in my situation at all.”
Another problem for laid-off workers, said Jane Hyatt Thorpe, associate research professor of health policy at George Washington University, is that the Cobra subsidy ended on March 31. The subsidy, which was originally passed as part of the stimulus package, pays 65 percent of laid-off workers’ Cobra payments for a total of 15 months. The average price for family coverage under Cobra is $1,100 a month, said Ron Pollack, executive director of Families USA, a nonprofit health care advocacy group. With the subsidy, that cost becomes a much more manageable $385. Most experts like Ms. Thorpe and Mr. Pollack said they expected Congress to extend the subsidy again when it returns from its recess. Bills to do so have been introduced in both the House and Senate.
And people who find themselves at the end of their Cobra eligibility, like Ms. Lipert, will need to look for alternatives in the independent insurance market or state government-sponsored programs. What follows is some advice for doing so. You’ve probably read some of this before in previous Patient Money columns. For many of you, insurance shopping during this interim period is status quo. But if you’re about to become uninsured, the advice bears repeating. Also, there are some aspects of the health care law that go into effect sooner than 2014 that may help.
Cobra Ending Soon
If you have been insured under Cobra, you are guaranteed coverage in the individual market even if you have a pre-existing condition. That’s why it’s important to start shopping well before you reach the end of your 18 months of Cobra coverage. If you’re young and healthy, chances are you may even find a better deal than an unsubsidized Cobra. If you do have a pre-existing condition, premiums will probably be high, but you cannot be denied coverage.
One way to lower the cost of your family’s total insurance bill is to cover your child under your state’s Children’s Health Insurance Program, or CHIP. These programs cover children in families earning too much to qualify for Medicaid but too little to afford private health insurance. CHIPs will continue to be financed until 2015, said Mr. Pollack of Families USA, and will not be affected by the new law. For more information go to insurekidsnow.gov.
If your Cobra ended six months ago or you’ve been uninsured that long for any other reason and you can’t afford or don’t qualify for private insurance, you could be eligible for your state’s high-risk pool by the end of June.
Traditionally, the risk pool is where people with pre-existing conditions who can’t get insurance elsewhere turn for coverage. But premiums can be expensive. Congress has set aside $5 billion to help make the pools more affordable until the health exchanges are up and running. For more information, contact your state’s insurance department.
Younger Than 26
Young adults who have lost their jobs, haven’t been able to find one or otherwise don’t have insurance may be able to get coverage under their parents’ health policies. The new law will require insurance companies to provide this coverage starting in September, although the exact eligibility requirements are not yet clear.
Of course, this works only if your parents have insurance other than Medicare and are willing and able to pay the extra premium for including you on the policy. The good news, said Mr. Pollack, is that adding a young healthy person to a policy usually entails a relatively small premium increase.
Just Laid Off
Try your best to sign up for Cobra coverage, even without the subsidy. “Cobra really is the most significant way that laid-off workers can retain health coverage,” Mr. Pollack said. Remember you have 60 days after your last day of coverage under your employer’s plan to sign up for Cobra. In those 60 days, you can look for a more affordable alternative or maybe find a new job. If something works out, you will have avoided paying the premiums, but if something happens and you need care, you’ll still be covered. What’s more, in 60 days’ time, perhaps Congress will extend the subsidy and make it retroactive.