Don't Let COBRA Benefits Run Out on American Families

Though the economy is showing some signs of stabilizing, Americans are still losing their jobs -- including more than a quarter-million last month -- and the unemployment rate is still expected to climb over 10%. In many communities all across the country, unemployment is already well beyond that figure.

We now know economic recovery is going to be a long process. Nearly 15 million Americans are looking for work and 5.4 million Americans are facing unemployment of longer than 27 weeks.

Some unemployment programs included in the Economic Stimulus Bill passed in February have proven insufficient to serve the urgent needs of so many working families, and threaten to run out when so many depend on them. Extended COBRA benefits -- assistance for unemployed workers to purchase health insurance -- that were included in the Stimulus will begin to run out as early as next month.

Losing one's job is difficult enough. But losing one's health care along with it -- and worrying about being able to get treatment for oneself and one's family, or fearing bankruptcy in the event of injury or illness -- is something Americans should not have to cope with in this difficult time.

To help ease that burden, I have introduced the Extended COBRA Continuation Protection Act of 2009, which extends by six months a provision from the Economic Stimulus Bill that provides 65 percent of health insurance premiums to individuals eligible for COBRA benefits who have been involuntarily terminated during the recession.

The original subsidy provided nine months of benefits for people who lost their jobs between Sept. 1, 2008 and Dec. 31, 2009. This legislation extends COBRA benefits in three main ways. First, it extends by 6 months -- to 15 months -- the total allowable time an unemployed worker can receive COBRA premium assistance. Second, it extends this assistance to individuals who are involuntarily terminated between January 1 and June 30, 2010. Third, it extends eligibility for traditional COBRA coverage an additional 6 months, to 24 months, for those terminated at the beginning of the economic recession in 2008.

The effect of this legislation will be especially important to older workers who lost their jobs or were forced to accept early retirement but are not yet eligible for Medicare.

During debate on the Economic Stimulus Bill, I argued, based on the economic modeling, for bolder action. Instead, the Senate weakened the measure for political reasons -- limiting the size of the package and replacing job-creating infrastructure investments with wasteful corporate tax cuts. The result has been nearly 1 million fewer saved or created jobs, and the associated strain on many of the assistance programs included in the legislation.

When the markets and Wall Street collapsed, we in Congress owed the American people the action necessary to meet and overcome the crisis. I think we came up a little short. This legislation is an important step to keeping our commitment to America's working families who were the engine of prosperity but are now, through no fault of their own, still bearing the brunt of this recession.

Cross-posted on The Hill's Congress Blog

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Comments

[Argente]

Insurance is about covering risk; rather than letting the insurance companies create their own little risk pools to exploit, knock down the state-line barriers, throw the 300+ million of us into a single pool, which will drop risk factors as low as they can go. Total # federal employees = 4.2 million. That means increasing the risk pool by a factor of 70+. Then extend the Federal Employee Health and Benefit plan (FEHB) to all, even if it's as an option. You'd still be buying the insurance from all the companies you've come to know and distrust; Blue Cross, Aetna, etc. But rates would drop markedly as those companies fought it out for market share.

Want to see what the FEHB provides? (The employee pays about 28% of the premium cost on average; although remember that we taxpayers actually pay 100% of their premiums.)

http://www.opm.gov/insure/health/rates/index.asp

http://www.npr.org/templates/story/story.php?storyId=112880933

Congressman and Senators get even better coverage. How about writing to yours and telling them you want at least what they have?

[Argente]

As bad as COBRA may be, it's COBRA or nothing for my family. Have not replaced the job from which I was laid off, but the full bore premium will return to $780/month on Jan. 1. Without an extension of the current benefits, we will be a family of four without health insurance.

[ILuvBubbles]

Cobra is a farce! Who can afford the ENTIRE insurance premiums after you lose your job?! Set it to fail right from the start. DON'T GET SICK!

[msgirlintn]

I hope this bill passes. And Congress needs to extend the unemployment benefits that the Grand Old Party is blocking (shocker). The Repubs devastated the economy with the Bush tax cuts, 2 wars, and medicare drug benefits that weren't paid for (was anything paid for under Bush) and now they want to twist that knife a little more and not help those they put out of a job.

I sure hope that Joe beats Arlen Specter. Joe is a guaranteed Dem vote. Is Specter another Joe Lieberman?

[oldngrumpy]

We should stop trying to plug up holes in the outdated dike of our jobs market and realize that this economy, and jobs, aren't coming back as we knew them. Recovery is going to mean a seismic shift in the job market and re-education for many workers to fit the new model.

Remove the Social Security penalty for early retirement and couple Medicare with it. How many greeters can WalMart hire? Taking a large number of seniors out of the job market would free up jobs for younger workers and take a great deal of pressure off states who are now broke and don't have the luxury of deficit spending by their constitutions. Paying $300-500 pr month more to a senior and providing them Medicare availability is a lot cheaper than supporting a young family on the safety net.

I know that many will point out that both Social Security and Medicare are already broke, but I would point out that our entire nation is now operating on Monopoly money and will only sink farther if we don't begin to deal with our long term problems. A 62 yr old worker isn't likely to become an asset in the "green" economy while opening up his job for a younger worker could take enough pressure off the job market and state budgets to allow us to begin the move forward.

[BKearney]

I lost my job, so with very little income i get a new bill for $1200 a month, good deal for me

[PhillyQuaker]

COBRA is not usually available for folks coming out of small business setting. Altho PA did pass the mini-Cobra legislation, it's not retroactive and only helps folks laid off after 7 10 09.

One trick an employer will use to keep you from being eligible for COBRA is to state you were fired for wrongful misconduct. So they will try to find any old reason to fire you after you have received a formal notice of lay off.. That way they can cheat you out of unemployment benefits as well. At least until you have a hearing.

[BunnyX]

I doubt that - why should they bother? Cobra is no skin off their nose - you are paying the whole premium direct to the insurance company, and it doesn't cost the employer a dime.

[DarkWitch]

Who the he// can afford COBRA? I guess they can extend it all they want, because they don't have to worry about too many people using it.

[Elyriaohio]

Well said!!
Another reason for healthcare reform.

[PigLipstick]

I went on COBRA after a layoff 8 years ago and it was $850 a month for my wife and myself then, must be close to $1000 a month now. The term of coverage then was 18 months with an hardship extention to 24 if you were totally wiped out. No paycheck coming in and the average time to find even a crappy job now is 14 months, where are those monthly payments coming from ?

If the new healthcare bill is passed, you won't have to worry about COBRA, you will be forced into buying a mandatory healthcare policy estimated to cost a minimum of $1400 a month. If you stop paying for COBRA you will lose your insurance, if you stop paying for the mandatory healthcare coverage you will be fined $3000 or more, plus your monthly premium, every month. This is an improvement ?

Definitely an improvement for the corporate insurance companies that needed a bailout to recoup the costs of buying all those hospitals and clinics back in the 80s when they thought the American people were going to embrace the full implementation of HMOs, didn't happen. They seem to always win sooner or later and the American people always end up paying the price !

[ILuvBubbles]

You've read the Bill? No? Figured as much...

[EdA]

Unfortunately, the COBRA subsidy helps only those people who had been let go relatively recently.

COBRA is expensive in the first place -- the COBRA administrators take on an extra percentage onto the regular premium -- and that's not considering significant increases anyhow. And you should take into consideration the fact that people have COBRA primarily because they are out of a job, certainly out of one that offers benefits.

Last year, the state of Maryland cut the severance pay for the former CEO of Carefirst Blue Cross in half -- to "ONLY" $8 million. In January my 2-person COBRA bill went up by 23% -- to $1222, a month. Which, frankly, is a lot of money. Fortunately, I could put this on a home equity line of credit. But what is someone who doesn't have access to this supposed to do?

[dan-o]

Our COBRA payment from my wifes former employer went from $988 per month to $1359 per month in December. She worked for a small company that has let go about 200 of 300 employees. We were the only ones to take the COBRA insurance and a lot of the employees are now part-time so they don't get insurance. The number of people in the group dropped off and that caused the premiums, for eveyone left in it, to skyrocket. Even with the subsidy I don't know if we can afford to pay it.

I lost my job and all she has found is part time work. Her employer (a national retailer) offers insurance to part time employees and for the $78 biweekly premium we get a $5000 maximum per year policy. Yes-you heard right $5000 per year maximum coverage. She is working 10 to 20 hrs per week for the holiday season so she is no longer counted as unemployed. Amazing isn't it?

[twofish]

Not only is COBRA ridiculously expensive but there are lots of little gotchas that cause you to lose it. You might close the following loophole: If you're disabled there's a 2-year maybe-you'­ll-drop-de­ad-and-we'­ll-never-h­ave-to-cov­er-you waiting period between the time you go on disability and when you're eligible for Medicare. You can extend the 18 months of allowable COBRA (California rules?) but only if you ask for it during the first month of COBRA, when you might not know yet if you're going to get disability. They got me with that little zinger, with the result that I had no health insurance for almost a year between the end of COBRA and when I could buy into Medicare. And too many assets to get Medicaid.

[CommunistUtopia]

Here is a better idea. Get rid of government health care and cap and trade. Reduce taxes, cut government regulation, and get people back to work. That will eliminate the need for a Cobra extension. This is not hard. Reagan did this in the 1980s. It takes some time for the economy to get rolling but look at the results. The formula is out there and yet this administration ignores it.

[MaryanneAZ]

Joe is definitely the man!!! I believe, however, that the extension will be added to the UE extension. Despite all the rhetoric and last-minute theatrics, these Reps all know that they HAVE TO pass an extension of UE including the Cobra subsidy. The GOP cannot whine about the slow job rates, and simultaneously slit their constituents' collective throats by refusing to back an extension of UE and Cobra subsidy benefits. It would be tantamount to the GOP saying, "this Admin is failing you and we're going to make sure you go down full stop." How absurd. In my case, I lose my subsidy after next month, and my small income is not going to stretch to cover $592 a month without exhausting my savings. If I exhaust my savings, then what will I do when or if an emergency of some kind occurs? This extension needs to be made yesterday!

[NYC-CatLover]

That makes no sense at all. The real problem is that these insurance plans are way too expensive to begin with and often have far more coverage than the person actually needs. Lining the insurance companies' pockets with taxpayer money for COBRA isn't the anwer, that is just putting a bandaid on the problem (pun intended) of overpriced, over- padded, private health schemes.

[MaryanneAZ]

Swing, and a miss!!! The Cobra subsidy allows the Employer to reduce their tax bill by the 65% they pay toward the premium, while the Employee pays the other 35%. Most Employers pay that amount toward active Employees' premiums with no tax credit. The only financial hit will be to the tax revenue base due to less taxes being paid by Employers when they take this credit; assuming that big companies actually ever pay their share of tax revenues with all of the loopholes they game. No private insurance company is getting anything more than the full premium they would have gotten had the Employee been responsible for the entire premium. The lack of jobs necessitates an extension of the tax credit/Cobra subsidy because Employees cannot find jobs to replace their old insurance and do not get enough pay from their UE to afford the full Cobra premium. Over-priced insurance is an entirely different issue.

[kasv]

Why can't they simply lower the medicare eligibility age, even if just for those of us who are over 62, under 65, and lost our jobs?

[MaryanneAZ]

The Department of Labor statistics say that those over 50 are much less likely to regain employment in the current climate. Many firms used the downturn as an excuse to purge all of their more expensive, older employees without fear of age discrimination claims. [Many EEOC complaints were filed, however, because employees saw through the ruse.] If anything, the age should go down to at least 50, but only until the person becomes re-employed. An open enrollment for all unemployed would be fairest course of action.

[FreeSpeech4All]

You are absolutely right. My brother was laid off a year ago (he was told flat-out that his job was being outsourced to Asia) and has yet to find a new job. He has never been unemployed before and in fact has always had his pick of jobs in the past. I'm sure his age (mid-50's) is one reason why he can't get hired. We need to stop saddling employers with the burden of health insurance and have a single payer system that covers everyone, like most other civilized nations have.

My brother's expensive Cobra coverage runs out the end of this year.

And I'm a self-employed 50-something who can't afford coverage at all.