COBRA's High Cost Bites Into Jobless Safety Net
As unemployment rises more women are turning to COBRA for health insurance coverage, but discovering it's either too expensive or not available. Women who shop for individual insurance often face higher rates due to "gender rating," a recent study found.
When Jane Schiffler loses her job on July 1, the college administrator will face tough choices.
"To help make ends meet for me and my 7-year-old son, I've decided to give up our land line and just use a cell phone; to cancel our cable TV and just get the basic channels; to go to the library instead of buying books; and to cook at home instead of eating out," says Schiffler, a single mother in New York City. "But I haven't figured out what to do about our health insurance coverage, which remains my biggest--and most frightening--challenge."
Schiffler qualifies for COBRA, the Consolidated Omnibus Budget Reconciliation Act.
The 1985 law allows laid-off workers and their dependents to remain on their former employer's group health plans for 18 months as long as they pay the same amount for coverage as their employer did, and 150 percent of that amount if they extend COBRA coverage beyond 18 months.
"The problem is that COBRA is just too expensive for me to afford," says Schiffler, who is using a pseudonym in this article because she doesn't want her concerns about health coverage--and the fact that she may have to do without it at some point--to negatively impact her job search or her chances of getting health coverage in the future.
The average monthly unemployment payment in the United States is $1,278.
COBRA for an individual consumes 30 percent of that. Family coverage devours 84 percent.
Little Left Over
That leaves many laid-off workers with little left for rent, mortgage, utilities, groceries, and other necessities, found a January 2009 report from the Washington-based Families USA.
In February, the federal government moved to help such workers by passing the American Recovery and Reinvestment Act of 2009 (ARRA), which provides $25 billion in temporary subsidies so workers who were involuntarily terminated between Sept. 1, 2008 and Dec. 31, 2009 pay 35 percent of the normal cost of COBRA.
"While this is a significant subsidy, for the average woman, it's still more than the 16 percent of the cost of individual coverage or the 27 percent of the cost of family coverage that she would have paid as her contribution to health insurance while she was still working," says Karyn Schwartz, a senior policy analyst for the Kaiser Family Foundation, based in Menlo Park, Calif.
Many unemployed women, meanwhile, don't qualify for COBRA.
Ineligible are laid-off women with individual incomes of more than $125,000; family incomes of more than $250,000; employers who never offered health insurance in the first place, and employers who went out of business (and therefore had no health plan at the time of job termination).
10 States Lack "Mini Cobra" Laws
"Company size is also barrier to coverage," says Cheryl Fish-Parcham, deputy director of health policy for Families USA. "COBRA only applies to workers in companies with 20 or more full-time employees. Some states are working to help laid-off people from smaller firms. But in 10 states, there are still no 'mini COBRA' laws creating coverage for these laid-off workers, who now have to go without coverage, or pay high premiums for individual plans."
The average private health insurance plan for an individual costs $4,704, while one for a family costs $12,680, according to a March study in the New England Journal of Medicine. And due to a practice known as "gender rating," most private insurers charge women more than they charge men, according to a 2008 report by the Washington-based National Women's Law Center.
"I can only afford COBRA for a few months, and I definitely can't afford to buy private coverage," says Schiffler. "If my savings run out, I may have to go without coverage, though my son may qualify for a state program for children. I need a safety net, but if I have to choose between eating and buying health insurance, I am going to eat."