Health Care Reform Would Continue COBRA
Oct 2009
The health care reform bills would keep provisions from the Consolidated Omnibus Budget Reconciliation Act (COBRA) that allow workers who lose their jobs to buy health insurance through their old plan, according to John Sarno, president of the Employers Association of New Jersey, who is following the reform bills closely. But other options could also be available, he says.
"The health care reform bills under consideration by Congress would maintain COBRA but also let displaced workers buy alternative insurance policies through a health insurance exchange that anyone would be eligible to use,” according to Sarno.
Legislation under consideration in both the House of Representatives and the Senate would provide subsidies to help people buy insurance, and the newly unemployed could immediately apply for them. In the Senate Finance Committee bill, subsidies would be available on a sliding scale to ensure that consumers would not have to spend more than 12.5 percent of their income to buy the least expensive insurance plan available in their region.
Earlier this year, the American Recovery and Reinvestment Act was signed into law. The ARRA provides assistance to individuals who have been laid off from September 1, 2008 through December 31, 2009, by providing a 65 percent subsidy on COBRA premiums for up to nine months. To qualify for this subsidy, the terminated or laid-off employee must have an annual adjusted gross income below $125,000, or $250,000 for joint return.
According to the Kaiser Family Foundation, the subsidy allowed the average family to continue COBRA coverage for $377 per month, compared with more than $1,000 per month without the subsidy.
A Hewitt Associates’ analysis found that monthly enrollment rates for eligible workers averaged 38% from March 2009 through June 2009, compared with 19% in September 2008 through February 2009. The analysis was based on enrollment rates at 200 large U.S. companies with eight million employees.
The House bill would allow COBRA beneficiaries, in many cases, to obtain years of additional COBRA coverage from their former employers but there is nothing comparable in either proposal from the Senate. All of the proposals would subsidize the purchase of insurance for those who cannot afford it.
