If you’re recently unemployed, I’m sure you’ve had the same experience as I when that COBRA notice arrives in the mailbox. That generous offer of the opportunity to continue your employer’s health coverage just doesn’t seem quite so generous when you read the page with the premiums. Mine arrived just the other day. By my calculations, maintaining coverage under COBRA will require me to magically produce a payment equal to a hefty mortgage payment at a time where I’m unemployed.
At the time of its passage, COBRA was a great idea, a concept intended to help workers bridge the time between jobs with existing health coverage rather than trying to find their own. It worked for about six months, and then premiums started climbing at an alarming pace, and haven’t leveled out yet.
Families USA published a study today which clearly illustrates the problem with COBRA: In 41 states, COBRA Premiums Cost more than 3/4ths of Unemployment Benefits; in Nine of those states, They Cost More than 100 percent.
The average unemployment insurance (UI) benefit varies substantially from state to state, as do average COBRA premiums. According to the report:
* On average, nationally, UI monthly benefits are $1,278, while COBRA monthly premiums for family coverage are $1,069, or 83.6 percent of UI benefits.
* In 41 states (AL, AK, AZ, AR, CA, CT, DE, FL, GA, ID, IL, IN, IO, KS, LA, ME, MD, MI, MS, MO, MT, NE, NH, NM, NY, NC, ND, OH, OK, OR, PA, SC, SD, TN, TX, UT, VT, VA, WV, WI, and WY) plus the District of Columbia, COBRA family coverage premiums, on average, consume more than three-fourths of average UI benefits.
* In nine of those states (AL, AK, AZ, DE, FL, LA, MS, SC, and WV), the average COBRA premiums equal or exceed average UI benefits.
* In 17 states (AL, AK, AZ, DE, FL, LA, ME, MS, MO, MT, NE, NH, SC, SD, TN, WV, and WI) plus the District of Columbia, COBRA premiums for single coverage of workers consume, on average, more than one-third of UI income.
“COBRA health coverage is great in theory and lousy in reality,†said Ron Pollack, Families USA’s Executive Director. “For the vast majority of workers who are laid off, they and their families are likely to join the ranks of the uninsured.â€
That’s right. Get laid off, face the choice to eat and pay the mortgage or forego health insurance. The weight of job loss is clearly heavier with the prospect of losing everything if anyone in the family is ill in the interim.
Worse yet, employees eligible for COBRA can’t go out and get an individual policy that might cost less than the COBRA continuation policy, because they’re eligible for COBRA. If they opt out of COBRA, they’re not released to shop for an individual policy because they could have opted COBRA.
It doesn’t work. I’m not sure what we’re going to do here, because pre-existing conditions mandate continuing coverage, but at the same time, the payment is more than our house payment.
Read the full study here (PDF).
Are you caught in the COBRA’s grasp? Post a comment with your story. Let’s get the word out and include it in the health care reform debate.
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