Counting On The COBRA Subsidy For Coverage

Every day, dozens of confused, laid-off workers call the privately run COBRA Help Center in Long Island, N.Y., which administers COBRA group health insurance plans. They're struggling to understand whether they're eligible for federal subsidies. It's not surprising, says George Fox, a field underwriter for the company Planning Financial Futures Inc., which runs the center on behalf of employers and consumers.

COBRA is shorthand for the federal law that allows ex-workers to continue their health insurance for 18 months as long as they pay the full cost, including what had been their employer's share. With job cutbacks spiking during the recession, Congress enacted legislation in February 2009 authorizing the government to pay 65 percent of premiums.

But lawmakers have extended the program and benefit period in fits and starts, and Fox says it is a "constantly moving target" for the public. "There's just so much unclear information in the general public about the COBRA extension," he says. Officials from the U.S. Department of Labor, one of the government agencies that oversees the program, have acknowledged public confusion and operate a toll-free hotline, 1-866-444-3272, to answer questions.

Employers are also uncertain of what to tell laid-off workers about their benefit options. Amy Bergner, a partner at the benefits consulting firm Mercer, says the company "starts hearing a lot of interest" from employers each time an expiration date approaches.

Hoping COBRA Subsidies Will Continue

At first, workers laid off from September 2008 through the end of December 2009 were eligible for nine months of subsidy. But in December, as the subsidy began to run out for the first workers, Congress expanded eligibility to workers laid off through February 2010, and extended the subsidy period from nine months to 15 months.

On March 2, Congress again expanded the eligibility period for newly laid-off workers, but only through the end of this month. Then, just last week, the Senate passed a jobs bill with a provision that would extend the subsidy to workers laid off through the end of 2010. The House has not yet acted on the Senate measure and is unlikely to pass it as is, according to a senior House Democratic aide, requiring the two chambers to resolve differences in conference.

Unless Congress keeps extending the eligibility and benefit periods, people who lose their jobs after this month and those whose subsidies expire after 15 months will confront the challenges of the unsubsidized private insurance market. Fox says he's hearing concerns because many people can't afford COBRA without a subsidy. The average family COBRA premium costs $1,137 per month, according to the Kaiser Family Foundation. (KHN is a program of the foundation). That's about 83 percent of the average unemployment check, according to a study by Families USA, a consumer advocacy group.

Subsidy Helps Laid-Off Workers Keep Coverage

It's not known exactly how many people have taken the subsidy, but early on, the congressional Joint Committee on Taxation estimated that about 7 million people could be covered at a cost of almost $25 billion.

A survey by Hewitt Associates, a benefits consulting firm, found that the proportion of laid-off workers who take COBRA has doubled since the subsidy began, from 19 percent to 38 percent.

For 47-year-old blues musician Matthew Skoller, the program has been a lifesaver. When his wife Tina was laid off in January 2009 from her job at a Chicago department store, the couple didn't think they'd be able to keep their health insurance. They were eligible for COBRA, but it would have cost them $1,035 a month. "We couldn't afford it," Matthew says.

But the Skollers caught a break when a friend of Tina's saw a segment on Oprah describing the subsidy program. They applied, and their premium went down to a more manageable $362 a month. Soon after, Matthew Skoller had surgery to remove a cyst from his vocal chords, a prohibitive expense had the subsidy not made it possible to continue their health insurance. "It's meant a lot to us," he says of the subsidy.

The couple's COBRA coverage is scheduled to expire this summer, a source of stress. "We don't know from one month to another whether they're going to extend this to us again," Matthew says. "And that is unto itself debilitating."

This story was produced through collaboration between NPR and Kaiser Health News (KHN), an editorially independent program of the Henry J. Kaiser Family Foundation, a nonpartisan health-care policy research organization. The Kaiser Family Foundation is not affiliated with Kaiser Permanente.

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