COBRA Subsidies About To Expire

Compiled By Staff
December 14, 2009

Many unemployed Americans are about to see their health premiums substantially increase as federal COBRA subsidies begin to expire.

The Consolidated Omnibus Budget Reconciliation Act, known as COBRA, requires employers to offer health insurance to laid-off workers for as long as 18 months. However, participants typically are required to pay for the entire cost of such coverage rather than the amount they paid as employees. The amount is often prohibitively expensive, and as a result, many decide to drop COBRA coverage within a few months or don't take advantage of it at all.

But a recent federal subsidy has allowed many workers who have lost their jobs to retain health insurance under COBRA. The subsidy covers 65 percent of a former worker's COBRA for up to nine months, making health coverage much more affordable.

But as the subsidies are begin to expire, unemployed workers are being left with far more expensive health insurance premiums and no way to cover them.Kaiser Health News reports that according to Families USA, a consumer advocacy organization, COBRA coverage typically will eat up 83 percent of the average unemployment check. Ron Pollack, the group's executive director, predicted that as a result of the high cost, many people will be forced to drop their health insurance.

Roberta Mason of Maine is one such example, reports The New York Times. After being laid off as a supervisor in a shoe factory last January, she kept her health insurance because the federal subsidy trimmed her COBRA payments to $199 a month. When the subsidy expires in January, her payments will increase to $550--more than half of her unemployment check.

"I've tried to scrape some money together to take care of things when the COBRA subsidy ends," she was quoted as saying in the Times, "but it's just not enough."

It's an unfortunate situation that is being seen across the country. The Times notes that Families USA reported that in nine states, COBRA payments cost more than the amount of the average unemployment check.

Congress has been trying to extend the subsidy. Bills introduced in the House and Senate would adjust the benefit period to 15 months and extend the deadline for signing up to June 30. Last week, President Obama said that he wanted to move forward with the legislation, but no timetable has been set. What's more, the benefit would be costly: The San Francisco Chronicle reports that according to a Capitol Hill source, extending the subsidy would cost about $25 billion.

Kaiser Health News notes that employers are also anxious for Congress to take action soon, because they regard the subsidy as an administrative and financial burden. Warren Salerno, employee benefits director at a New York-based advertising and marketing company called Interpublic Group, noted that delays would result "in additional costs to us," he said, "and it's unfair to the ex-employee."

Career and Education News

Our News Writers and Editors

CityTownInfo Writers and Editors


Follow Us on Facebook
Follow Us on Twitter
Follow Us on Youtube

Career and College Resources on CityTownInfo

Real-World Career Reports

Career Stories from workers: daily activities, job tips, best/worst job aspects, training, etc.
Daily Career & Education News from our staff. We're an approved Google News provider!

Career References and Original Articles

Resource Center. A starting point for all CityTownInfo career and college resources.
Career Overviews of hundreds of careers: descriptions, salaries, forecasts, schools, more.
Best Careers Not Requiring Degrees: Good pay, job growth, low need for degrees.
Helpful Articles, many in "how-to" format; e.g., "How to Become a Chef".
Infographics covering employment and educational trends.

College Directories and Lists

These lists link to thousands of detailed school profiles.

Colleges by State. Nearly every college and trade school in the country.
Colleges Listed Alphabetically. About 7,000 colleges & trade schools, including online schools.
Colleges by Major City. Browse cities with multiple college options.
Online Colleges. Colleges with online degree programs.
Graduate Schools by State. Colleges offering graduate degree programs.
Graduate Schools by Major City. Find cities with multiple graduate school options.