Personal Injury Law

More Unemployment More Uninsured And COBRA Not The Answer

By Jane Akre

Unemployment and layoffs announced this week show that no industry is immune.

And for those workers, there will be COBRA health insurance, offered by employers, to cover them for up to 18 months. 

But a new study shows that only about one in ten former employees take advantage of COBRA.

 The Commonwealth Fund, a private foundation, reviewed a 2007 survey of more than 3,500 people, finding that two-thirds of those surveyed, if laid off, would be eligible for COBRA. But data from 2006, indicates that only nine percent would opt into the program. The small number of enrollees is due to the cost of COBRA.

What the Commonwealth Fund found was that the cost of COBRA equals four to six times what the employee would pay if they were employed - $4,704 for an individual per year and $12,680 per family.

Laid off workers have up to 60 days to enroll in COBRA, otherwise they may find themselves joining the ranks of the uninsured.  About 46 million were uninsured in 2007, reports CNN.

Erin McCullar, 26, of Birmingham, Alabama, was laid-off of her job as an interior designed in October. She missed the deadline to sign up for COBRA. Because she has a preexisting condition, type 1 diabetes, she is unable to obtain health insurance without a waiting period. Instead, she had to stockpile her insulin and often went without.

Whether one opts for COBRA is usually dependant on their income level. Three percent of workers near the poverty level kept COBRA, compared to 14 percent of workers in the middle class. 

With unemployment at record levels- 7.2 percent in December and 8.3 percent predicted for 2009, the cost of COBRA is a pressing health care reform issue. 

The Commonwealth Fund suggests that substantial financial assistance of 75 percent to 85 percent of premiums could help laid-off workers maintain coverage. In addition, expansion of Medicaid and the State Children's Health Insurance Program (SCHIP) would benefit low-income, laid-off workers and their families who are ineligible for COBRA.

As an alternative to COBRA, the New York Times reports that the Medicaid enrollments grew by five to 10 percent over the last year, with children from low-income families constituting the bulk of the enrollments. Many are turning to government sponsored health care intended for the disabled, nursing home residents and pregnant women. Medicaid enrollment usually trails job losses.

COBRA, the Consolidated Omnibus Budget Reconciliation Act, was passed by Congress in 1985 to allow out-of-work employees to continue their health insurance.  Generally larger companies, with more than 20 workers, offer COBRA.  #

Full post as published by InjuryBoard on January 26, 2009 (boomark / email).