Many laid-off workers to lose federal COBRA subsidies, may join ranks of uninsured

Many of the estimated 7 million laid-off workers and dependents who received federal COBRA subsidies to help pay for health care coverage this year lost those subsidies Tuesday.

The average Kansas family who lost such subsidies now needs to come up with $685 more per month to retain health coverage under COBRA. That’s not easy to do when the average unemployment insurance check is $1,465 per month.

Other options include looking for another health insurance plan — but often they are more pricey than COBRA — or joining the ranks of the uninsured.

“When workers lose their jobs, they often lose their health coverage as well. For millions of laid-off workers and their families, the federal COBRA subsidies have been a health coverage lifeline,” said Ron Pollack, executive director of Families USA, a consumer health organization.

The group issued a report Tuesday that looked at COBRA subsidies.

Costly COBRA program

The government COBRA program guarantees 18 months of continued health insurance coverage, but the former worker must pay the full premium plus a small administrative fee. In Kansas, the average family premium costs $1,054 per month, which is 71 percent of the average monthly unemployment check.

“This is simply unaffordable,” Pollack said.

Nationwide, the average COBRA premium for family coverage costs $1,111 per month — 83 percent of the average $1,333 monthly unemployment check.

In nine states, the average COBRA premium exceeded the average unemployment benefit. In Mississippi, for example, the premium is 22 percent higher at $1,027 compared with an $839 check.

The American Recovery and Reinvestment Act was enacted by Congress last February to help during the doldrums of the recession. Under the stimulus program, the federal subsidies paid 65 percent of the cost of COBRA premiums. In Kansas, the average COBRA premium dropped from $1,054 per month to $369 per month. The subsidy was available to workers laid off between September 2008 and December 2009 and who were eligible for COBRA continuation coverage.

Program expires

But, there are a couple of catches.

First, the program only lasts until Dec. 31. If someone loses their job after Jan. 1, they will not qualify.

Second, the subsidies are only available for nine months. For the initial group of beneficiaries who signed up in March, like Lawrence resident Jerry Kemberling, the benefits ended Dec. 1.

Kemberling, 63, was laid off last February from Sauer-Danfoss. Kemberling and his wife were able to continue their health care coverage through the COBRA subsidy program, paying $368 per month instead of $1,039.

But the benefits ended Tuesday. After researching health insurance plans, Kemberling opted to pay the $1,039 bill for COBRA coverage in December because it was less expensive.

“I figured OK, I would suck it up,” he said. “We will just have a little less Christmas and pay for insurance, knowing in January it would be less.”

Kemberling will continue his COBRA coverage through his former employer. Sauer-Danfoss is changing insurance companies next year, and the new plan will cost less at $869 per month, but it also will provide less coverage and require a higher deductible.

“I decided to stay on COBRA until I can get back to work and hopefully, get some more reasonable coverage,” Kemberling said. “Unless I go with a $10,000 deductible, at my age, I can’t find private health insurance that I can afford.”

The only way Kemberling said he and his wife have been able to afford any health insurance is by opting to receive Social Security benefits early — something he didn’t want to do.

“That’s going to be a long-term, ill effect on us, having to take Social Security at an early age. Congress, I am sure loves it, but it’s not good for me,” he said.

Pollack, of Families USA, said a couple of bills have been introduced in Congress that would extend the subsidies for another six months that would benefit people like Kemberling.

Numbers uncertain

Pollack said it is uncertain how many people have benefited from the subsidy program. The Congressional Budget Office and Joint Tax Committee estimated that about 7 million adults and dependent children would receive the COBRA subsidy this year. The Treasury Department is still compiling data about how many workers actually received the subsidy.

“Those numbers do not exist, and we are just as curious about them as you are,” Pollack said.

But he strongly believes without a federal COBRA subsidy, the number of uninsured Americans will climb.

“For those people who join the ranks of the uninsured, the typical thing that will happen to them is they will defer care at the onset of a disease and at the onset of a pain. They will defer going to a doctor and getting the problem looked into,” Pollack said. “At some point, they might need emergency care and they will go to the emergency room, which is the most expensive form of care, and often it comes at a point when it is too late. So the real impact is going to be in lost lives and health that is put in jeopardy.”