COBRA Health Subsidy Expired This Week

The COBRA health insurance subsidy that has helped laid-off workers continue to use their former employer’s health coverage drew to a close on Wednesday. The end of the subsidy is now raising concerns about how the unemployed will cover their health expenses without federal support.

Why COBRA Subsidy Was Not Extended

The Consolidated Omnibus Budget Reconciliation Act (COBRA) was implemented in 1985 to allow people to take advantage of health coverage from their employers for up to 18 months after their jobs had been terminated. The act also ensured family members and dependents insured under the plans were covered.

Typically, the insurance costs associated with COBRA are considerably higher than what a worker would pay if still employed. However, the option is still usually cheaper and more extensive than independent coverage options.

When workers were laid off during the financial crisis, the government stepped in to help cover the costs of insurance through COBRA by offering a 65 percent subsidy to those who had been unemployed under those circumstances since Sept. 2008.

The subsidy was extended three times to cover workers who had lost their jobs through May 2010. However, it lasted 15 months and Aug. 31 marked the date that the last workers would be able to take advantage of the subsidy.

COBRA Impact

There’s no doubt the COBRA subsidy made a huge impact on unemployed workers. According to a study conducted by Hewitt, an employee-benefits consulting firm, COBRA enrollments had doubled in 2009 thanks to the subsidy.

This is because the average cost of coverage without the subsidy for a family was $1,137 a month, while it dropped to an average of $398 with the subsidy.

For the workers losing the subsidy, this means that they must revert to paying the full cost of COBRA coverage, while others may no longer receive coverage at all.

Those who are among the unemployed workers looking for assistance in finding affordable coverage could explore low-income health insurance resources that cover both the local and federal levels.

Unfortunately, navigating the health insurance realm without employer-based coverage can be tough, which is why it’s good to shop for health coverage diligently to find reasonably-priced insurance.