The COBRA cost

By Leoncillo Sabino

Laid-off workers whose medical insurance costs rivaled the size of their mortgage payments got some relief this year with the federally mandated subsidies to COBRA continuation plans.

For many, those subsidies ended this week, and monthly health insurance payments will triple – no doubt lending a sour note of irony to the fanfare this week as the Senate debates national health coverage reform on Capitol Hill.

This report from the non-partisan Families USA offers a state-by-state impact grid your readers will devour; on average in the U.S., the report says, the cost of COBRA continuation coverage will leap from $389 to $1,111 and eat up more than 83 percent of the typical monthly unemployment benefit.

It’s a compelling consumer, personal finance, jobs and work-life story that ties in well with the big unemployment figures being released this week.  Fact is, nine months – the duration of the subsidy – just isn’t long enough these days to find a job and like many safety nets that worked in the old economy, the subsidy is proving inadequate in today’s scenario.   (Inadequate, but better than nothing – to be fair, it does save the average worker a couple thousand dollars in out-of-pocket costs.)  Each month, more workers will be facing this dilemma as the meter runs out on their eligibility.

To recap, COBRA is part of a federal law that requires employers to let former workers buy in to their group plan for up to 18 months post-job loss – if the worker foots the entire bill. Early in 2009, Congress devised a subsidy in the form of a tax credit to providers, essentially picking up the tab for 65 percent of the premiums while the worker continued to pay 35 percent.  Eligible workers are those with termination dates between September 1, 2008 and Dec. 31 of this year.

Here’s a Department of Labor fact sheet; note that it includes information for employers as well as employees.  As a sidebar to your consumer story, you might check with local businesses to see what added costs and red tape the subsidy generates, if any.  Check with insurance administrators, too, if any big ones reside in your area.

The subsidy was designed to cover nine months per worker, meaning anyone who jumped on board in March as soon as the program started is going back to reality starting this month.  This CNNMoney.com article that provides some good background information. It notes that the average cost of continuation under COBRA is $400 for singles and more than $1,000 a month for families – meaning some households this month are looking at a $650 increase in premiums.

Some new bills have been introduced that would extend the subsidy by six months for current participants and widen the eligibility to include others.  The fate of the legislation is murky, however.

Meanwhile, help your audience understand options with a package about health-insurance stop-gaps in your area.  This USA Today article offers some suggestions; other sources would include your state’s workforce commission, health and human services agencies, large insurers and legislators – state and federal – involved in the health care debate.

Here’s a Twitter account that tracks COBRA legislation and other health care rules.  I’m going to steal a fantastic suggestion from Reynolds Center Web guru Robin Phillips and suggest that on this and other stories you use Twitter’s advanced search function – it allows you to enter keywords and the desired radius of your location to find people near you Tweeting on any given topic.  For this story, you might search “COBRA subsidy” or “COBRA legislation” to find concerned consumers and activists for your article.