COBRA Assistance for Unemployed Scheduled to End

December 31, 2009 is more than just New Year’s Eve. It is also the date that the federal COBRA subsidy is set to expire, leaving millions of unemployed workers to pay the full cost of health insurance.

The COBRA Health Insurance Continuation Premium Subsidy, went into effect March 1, 2009 and provides financial assistance to unemployed individuals so that they can maintain health care coverage. COBRA was started in 1985 and allows employees who leave their job to retain the same health insurance plan by paying the full premium. The problem is that not only do workers have to pay their part of the premium, but also the part that their employer previously paid. The full cost of these plans, are often too expensive for most people. Provided for in the American Recovery and Reinvestment Act of 2009, the COBRA subsidy was designed to prevent the catastrophic event of adding millions of newly unemployed individuals to the roll of those with no health insurance coverage. The subsidy is available to anyone who was laid off between September 1, 2008 and December 31, 2009. Eligible individuals receive a 65 percent discount of their premiums, which is paid for by the government. There are two problems facing this program. The first problem is that unemployed individuals are only eligible to receive the federal subsidy for nine months. That means that people who applied as soon as the program was available, in March of 2009, are about to exhaust their subsidy limits. Although these individuals will still be allowed to remain on COBRA, they will have to once again pay the entire premium. In essence, these people will see their health insurance premiums rise by 65% in a single month starting in December. The second problem the subsidy program faces is that it is set to expire on December 31, 2009. Anyone who is laid off on that date would be eligible for nine more months of subsidized COBRA payments. However, unless the bill is renewed by Congress, individuals laid off on January 1, 2010 would not receive this subsidy. According to Kaiser Health News, there are discussions in Congress to extend the eligibility for the subsidy through next year, as well as include individuals who were laid off prior to September 2008. However as it stands right now, there are no firm plans for how, or if, the program will be extended.