COBRA News

People Will Lose Coverage as COBRA Subsidies Expire

Many laid-off workers and dependents have lost their federal COBRA subsidies and may join the ranks of the uninsured, according to Families USA. The subsidies, which were started last March by the American Recovery and Reinvestment Act (ARRA), were available for only nine months. Under the ARRA, the federal subsidies pay 65% of the cost of COBRA premiums. Nationwide, the federal subsidies for COBRA family coverage average $722 per month.
Without subsidies, COBRA premiums for family coverage would cost laid-off workers an average of $1,111 per month, which is 83.4% of the average monthly Unemployment Insurance check. For the first recipients, who began receiving subsidies in March, the subsidies expired on November 30. For those who started receiving subsidies after March, the expiration would be nine months after their start-up date.

“For millions of laid-off workers, the federal COBRA subsidies have been a health-coverage lifeline. It is essential that new jobs legislation extends those subsidies,” said Ron Pollack, Executive Director of Families USA.

Pollack noted that pending health reform legislation would provide a permanent source of help to laid off workers, enabling them and their families to get health coverage through a newly created marketplace, called an exchange, and families with low incomes would get tax-credit subsidies to help pay the premiums.

“As this report clearly indicates, middle-income families are hurting and there is a pressing need to extend COBRA before the end of the year,” said House Speaker Nancy Pelosi (D-CA).
Any extension of the COBRA subsidy program would also likely make the subsidies available to newly unemployed people. Under the program, people who lose their jobs after December 31, 2009 would not qualify for the subsidy. For more information, visit www.familiesusa.org.
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Similarly Priced Alternatives to Subsidized COBRA Available

The national average for individually purchased family health insurance premiums was $383. That’s $6 less than the average subsidized COBRA premium of $389 and $728 less than the average unsubsidized COBRA premium of $1,111, according to eHealth Inc. The website, www.ehealthinsurance.com, based its data on 84,000 individual major medical family health insurance policies that were active in February of 2009.

Maternity benefits were covered in 22.1% of policies surveyed, with 47% of primary policyholders being women.
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Democrats Seek Extension to COBRA Benefits

At press time, 22 Democrats were urging the Senate to pass an extension of unemployment and COBRA benefits before the end of the year, citing the 10% unemployment rate and the annual rise in heating bills coming this winter. Bills still in committee would extend the COBRA subsidy until June and increase the subsidy to 75% of premiums from 65%. Pending legislation would also extend the $25-a-week unemployment benefit increase and suspend income tax on the first $2,400 of any unemployment benefits received. The full text of the letter is below:

Dear Majority Leader Reid,

We are writing to ask for your continued support to make sure that the extension of unemployment benefits and eligibility for the COBRA subsidy is given high priority and passed before December 31, 2009. In the face of a 10 percent national unemployment rate, it is imperative that we act quickly.
We appreciate your leadership in November, when Congress expanded unemployment benefits by up to 20 weeks through the end of this year. However, as you know, our work is not complete. Nationally, one million workers could lose jobless benefits in January if we fail to extend this program before the end of the year. By March, three million unemployed individuals would lose federal jobless benefits.

These families cannot afford to wait. They need help now to put food on the table and to pay their rent. In many states the weather is getting cold and families need assistance to pay their heating bills.

Additionally, delays extending expiring ARRA provisions that help unemployed workers will have major administrative consequences. In a few weeks, state agencies that administer unemployment benefits will be forced to notify workers that the program will be shut down by the end of the year. This will create added workload for state agencies already pushed to the brink by the high number of unemployed Americans seeking help.

We request action on a legislative package that includes an extension of the unemployment insurance provisions in the American Recovery and Reinvestment Act, including the Emergency Unemployment Compensation Program, full federal funding of the Extended Benefit program, an increase of $25 per week in state and federal benefits, and the suspension of the federal income tax on an individual’s first $2,400 of unemployment benefits. We must also extend the COBRA subsidy to ensure health benefits are available for those who’ve lost their job. Legislation has been introduced on both unemployment insurance and COBRA and we continue to hear from constituents on these important matters. We urge you to act now.

Quick action in extending these benefits is not only imperative for those who’ve lost their jobs, but it is also good for the economy. Economists routinely rate increased unemployment benefits as among the most stimulative tools available to government. In fact, estimates show that every dollar spent on increased unemployment benefits increases economic activity by $1.63. Families who receive these benefits are likely to spend additional money quickly, helping to move our economy out of a recession.
We thank you for your consideration of our request. Our offices are committed to working with you to ensure swift passage of legislation to help unemployed workers across the nation.
Sincerely,
Debbie Stabenow
Bob Casey, Jr.
Tom Harkin
Amy Klobuchar
Al Franken
Ben Cardin
Robert Menendez
Herb Kohl
Ron Wyden
Daniel K. Akaka
Jack Reed
Sherrod Brown
Arlen Specter
Sheldon Whitehouse
Jeanne Shaheen
Frank R. Lautenberg
Barbara Boxer
Carl Levin
Roland W. Burris
Kirsten E. Gillibrand
Jeffrey A. Merkley
Ted Kaufman
Christopher Dodd
Dianne Feinstein