You were laid off from your job. You’re already having difficulty making ends meet. And now the nine-month federal subsidy that was part of the stimulus package is expiring, for you and millions of other Americans.
What should you do?
First, don’t panic. Second, try to find a way to pay the higher cost for your benefits for a month or two while we wait to see what Congress does to extend them. And third, if your benefits haven’t expired yet, see your doctors, get your prescriptions written, and plan for the hiatus in the best way you can.
COBRA is short for Consolidated Omnibus Budget Reconciliation Act, a mouthful of vowels and consonants that help jobless Americans keep their health benefits while they aren’t working. In February, when Congress passed President Obama’s economic stimulus package, the federal subsidy was included to help people pay for the benefit. But that subsidy started expiring this month. And people are seeing their cost rise astronomically while waiting to see if Congress extends the subsidy.
"For millions of laid-off workers and their families, the federal COBRA subsidies have been a health-coverage lifeline," Ron Pollack, executive director of Families USA, a consumer health advocacy group, told the Washington Post.
More from that story:
“Legislation to extend the subsidy has been introduced in both the House and the Senate. The House bill, sponsored by Rep. Joe Sestak (D-Pa.), would extend the maximum subsidy from nine months to 15 months. It would also expand eligibility to people who are involuntarily terminated through June 30, 2010, rather than the current cut-off of Dec. 31. Sens. Sherrod Brown (D-Ohio) and Robert P. Casey Jr. (D-Pa.) also want to extend the subsidy to 15 months, plus increase the federal share from 65 percent to 75 percent.
“Just before Thanksgiving, Brown and Casey, along with Sens. Al Franken (D-Minn.), Sheldon Whitehouse (D-R.I.) and Robert Menendez (D-N.J.), sent a letter to the Senate leadership urging an extension of the COBRA subsidy.
" ‘It is imperative that we do all we can to limit the rise in the newly uninsured -- and the subsequent increase in uncompensated care and Medicaid enrollment that would surely follow,’ the senators wrote.”
OK. So there’s politicking going on, and that’s good. Obama last week endorsed the concept of extending the subsidy, and common wisdom says it will happen – but that the timing is unsure. In the meantime, there are steps you should take, outlined in a financial column in The San Francisco Chronicle:
• If you are about to lose the subsidy, do not cancel your Cobra coverage but do shop around for an individual policy with "the benefit level you want and a premium you can afford," says Chris Hakim, director of Cobra solutions with eHealthInsurance.
• Check online and with a licensed agent. Be aware that you may not qualify for rates you see advertised. With some insurance companies, you can apply online and get an instant answer and rate. With others, you will have to wait for approval. Once approved, you might have about 10 days to buy before the offer expires, Hakim says. Some companies charge an application fee, typically $10 to $25, that might be nonrefundable.
• If you have a pre-existing condition, continuing Cobra may be your cheapest short-term option, even if you have to pay the full premium. However, under federal law you can only continue Cobra coverage for 18 months in most cases. In California, you can generally continue Cobra for up to 36 months under a law known as Cal-Cobra.
• Bakich says that if people lose their Cobra subsidy in December, "it may be appropriate" to delay paying their December bill to see what Congress does. She says that most policies give you 30 days from the payment due date before canceling you. Read the bill carefully to understand the grace period and make sure your insurance does not lapse.
• Hakim advises people to "do their homework" so that if the subsidy is not extended, they are ready to move into another policy and let Cobra lapse.
• If you can't afford private insurance, investigate government-sponsored options. For help, call the Foundation for Health Coverage Education at (800) 234-1317 or visit its Web site at www.coverageforall.org.
The New York Times offers slightly different advice:
• Avoid a lapse. When your subsidy ends, you won’t get a lot of notice. Most likely you will simply receive your next Cobra bill in the mail for a much larger amount than you are accustomed to paying. Our advice: Pay it, no matter how much you have to scrimp and borrow. If you do not, your Cobra coverage will end immediately. And then the clock immediately starts ticking on interruption of your health care coverage. Under current law, if you have a gap in coverage of 63 days or longer, any insurance carrier from which you might then seek coverage could use any pre-existing health care issues you may have — like back spasms or heart disease — as a reason to deny coverage or charge astronomical premiums , far above even the expensive Cobra payments.
• Buy time. Yes, the full-price Cobra payments are onerous. But if you pay the first month or two, you will be buying time to see if the subsidy is extended and time to shop around for health insurance alternatives that may be more affordable. Check ehealthinsurance.com and healthplanone.com for general pricing information from carriers that provide individual policies in your area.
• Stay on top of it. If you’re making the switch to full payments, be sure to keep in touch with your Cobra administrator so you will know if Congress grants an extension, and what, if anything, you need to do to get it.
• Look for reductions. With or without the subsidy, family Cobra coverage costs much more than individual coverage or coverage for just you and your spouse. Without your regular income, your children may well be eligible for the Children’s Health Insurance Program, known as CHIP. It covers children in families that earn too much to qualify for Medicaid, but too little to afford private health insurance. If you can insure your kids through CHIP, Mr. Pollack said, you can significantly reduce your Cobra payment. For more information go to insurekidsnow.gov.
• Newly laid off? If you have been laid off this month and your employer has promised to cover your health care until the end of December, beware: that magnanimity could work against you. The way the law is written, workers are eligible for the subsidy only if they are “eligible for Cobra” before Dec. 31, said Kathryn Bakich, national health care compliance director for the Segal Company, a benefits consultant. And simply being laid off in December does not necessarily make you eligible, particularly if your employer-provided coverage is extended through the end of the year. If you have already received a pink slip this month, or you get one, Ms. Bakich suggests contacting your benefits department immediately to see if there is any way your Cobra eligibility can begin this calendar year.
The Washington Post:
http://www.washingtonpost.com/wp-dyn/content/article/2009/12/02/AR2009120203723.html?hpid=news-col-blog
The San Francisco Chronicle:
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2009/11/21/BUQU1ANI4G.DTL#ixzz0ZfMPtIPb
The New York Times:
http://www.nytimes.com/2009/12/12/health/12patient.html?_r=1&ref=health
eHealth Insurance:
http://www.ehealthinsurance.com/
Health Plan One:
http://healthplanone.com/
Children’s Health Insurance Program:
http://topics.nytimes.com/top/reference/timestopics/subjects/s/state_childrens_health_insurance_program_schip/index.html?inline=nyt-classifier
Insurekidsnow.gov:
http://insurekidsnow.gov/