Venomous COBRA

We all know COBRA is unaffordable. If you lose your job, how can you afford to pay more for health insurance?

You can’t. And the WSJ‘s got a write out today explaining just how few people take advantage of COBRA:

Fewer than one in 10 jobless workers extends their former employer’s medical coverage, a new study has found.

An analysis by the Commonwealth Fund finds that while two-thirds of working adults would qualify to extend health-insurance coverage under a federal law after losing a job, only 9% of the unemployed do so.

Workers are guaranteed the right to extend their medical benefits for a limited period under a federal law called Cobra, short for the Consolidated Omnibus Budget Reconciliation Act. The law generally covers group health plans of private and government employers with 20 or more workers, according to the Labor Department.

The Commonwealth Fund analysis, based on 2007 health-insurance survey data, found that most workers can’t afford to pay for Cobra coverage. It costs an average $13,000 a year for a family, compared with the average annual worker contribution of $3,200 for family coverage while employed.

That is because the employer usually is picking up three-quarters of the cost of health insurance. Under Cobra, employees must pay the total cost, plus a 2% administrative fee.

“In other words, you have to pay an extra $10,000 because you have lost the amount your employer was contributing to the coverage, and people who are newly unemployed find it very hard to afford,” said Karen Davis, president of the Commonwealth Fund, a private foundation that supports health-care research.

I’ve been there. It’s the final straw that pushed me into fighting for reform. When I lost my job, I had severance for a while, and then COBRA kicked in. It was more than $400/month. That’s a lot of money when you have no money coming in.

4 thoughts on “Venomous COBRA”

  1. Only $400? I would be THRILLED to have it so low. I have a diabetic friend that is paying $2500 a month for COBRA.

  2. For me, the worst part of COBRA is the limited duration. I work in an IT specialty where the most satisfying career I could probably have would entail working short-term contract assignments, essentially self-employment. But I have a chronic health condition that would bankrupt me if I lost the decent coverage that my large, fairly stable current employer provides. So even if I could afford the quadrupling or quintupling of my premiums, I’d be up a creek after 18 months if I could not find regular full-time work. I realize I’m not much of a sob-story. I can afford my health coverage; I just can’t afford to be ambitious.

    I hate that it will probably take scary unemployment numbers to get lawmakers to potentially take a look at improving COBRA.

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