9% of People Who Lost Their Jobs Used COBRA To Extend Health Care Coverage, Study Finds

Nine percent of unemployed workers continued their health coverage under COBRA, but most workers cannot afford the coverage, according to a recent report by the Commonwealth Fund, the Wall Street Journal reports. COBRA allows recently laid-off workers to remain on their employer-sponsored health plan for up to 18 months. Workers are responsible for the full cost of the coverage as well as a 2% administrative fee. COBRA costs an average of $13,000 annually for family coverage, compared with the average annual employee contribution of $3,200 for family coverage (McQueen, Wall Street Journal, 1/24).

The report found that 66% of all current workers would be eligible to extend their health coverage through COBRA if they are laid off. However, according to the report, laid-off employees would need assistance paying 75% to 85% of COBRA premiums to allow their premium contributions to remain at the same level as when they were employed. The report found that millions of eligible workers could retain health insurance under COBRA if they receive premium assistance. In addition, the report found that 38% of low-wage workers are eligible for COBRA because they are uninsured, do not receive employer-sponsored health insurance or work for small businesses that are not required to offer COBRA.

Two House committees last week approved portions of an economic stimulus package that would subsidize 65% of COBRA premiums for 12 months for recently laid-off workers. In addition, the legislation would allow laid-off people ages 55 and older and those with 10 or more years of tenure at their jobs to continue COBRA coverage until they find new employment or reach age 65. The Senate Finance Committee's stimulus measure would provide premium assistance for nine months.

Commonwealth Fund President Karen Davis in a release said, "Americans are losing their jobs at an alarming pace and this report clearly shows that many people cannot afford to take on the expense of COBRA just as they lose their income" (Attias, CQ HealthBeat, 1/23). The report states that Congress should consider subsidizing three-quarters of COBRA's cost for unemployed workers and extending the eligibility from 18 months to 24 months (Wall Street Journal, 1/24). In addition, the report recommends extending Medicaid and SCHIP eligibility, along with premium assistance, to unemployed, low-income adults (CQ HealthBeat, 1/23).

The report is available online.