COBRA Health Care Subsidies End

With unemployment still a major economic worry and health care reform not set to kick in until 2014, COBRA subsidies have become a lifeline for many Americans, the only affordable insurance option for many. Unfortunately, the government is reluctant to extend the COBRA subsidy after it expires.

According to “Insurance Matters” columnist Dan Heffley, COBRA is an option when you leave a job and you want to continue your health insurance from your company. It is not a government program. It is a way for employees to continue coverage with their health care provider for up to 18 months.

Initially, COBRA had to be paid 100% by the employee. But when the economy took a turn for the worse and left millions unemployed and unable to afford health insurance, Congress took action and a bill was passed to subsidize COBRA at a rate of 65%, leaving unemployed workers responsible for only 35% of their COBRA payment. The subsidy was available for those who were laid off between September of 2008 and May 31^st of this year.

The subsidy is now expired, meaning anyone losing their job on or after June 1^st will have to pay the full COBRA amount. According to a new report by Families USA, the average monthly unemployment income is $1,313 compared with an average charge of $1,107 for COBRA coverage. Many families will have to choose between feeding their family and choosing health care and will join the ranks of the 58.4 million people in this country that are living without health insurance coverage.

According to a CDC report, the largest problem for Americans who lacked insurance for part of the year correlated with the lack of employment, as 60.6 percent of unemployed adults (ages 18 to 64) experienced a lack of health coverage during that time as compared to only 21.8 percent of employed adults. And of the people uninsured for more than a year, 32.9 percent of them were unemployed, while only 13.3 percent of them were employed. With the U.S. financial crisis rendering many people unemployed or underemployed, health insurance has become one of the casualties.