More jobless are signing up for COBRA health insurance : Diane Suchetka
By: Health Insurance
Submitted: 2009-08-23 21:16:03 | Word Count: 463
Americans who have lost their jobs - and the benefits that go with them - have flocked to COBRA health insurance plans this year.
COBRA, short for the Consolidated Omnibus Budget Reconciliation Act, is the federal law that allows employees who lose their jobs to continue their employers' health insurance by picking up the entire cost. For many people, especially those with families, the cost had been so expensive they had no choice but to go without insurance.
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More people are enrolling in the plans now in large part because the economic stimulus bill that Congress passed in February reduced the fee employees pay for those plans to about a third of what it was before.
Instead of paying 100 percent of the premiums, plus a 2 percent administrative fee, they have to pay only 35 percent of the premiums. Their former employer picks up the rest of the costs and is reimbursed by the federal government.
On average, that drops an employee's cost from $6,600 for nine months of health insurance to $2,250.
The lower costs are available only for nine months and only to employees who were involuntarily terminated.
The jump in enrollment is documented in a recent study of 200 large U.S. companies conducted by Hewitt Associates, an Illinois company that, among other things, helps businesses design and implement health-care, retirement and other benefits packages.
The study found that 38 percent of those eligible for COBRA were enrolled in the plans from March to June of this year. That's a significant rise from the 19 percent who were enrolled from September 2008 through February 2009.
But even at the reduced price, most out-of-work employees try to find other coverage first - through a spouse, for example, or by finding another job - says Karen Frost, Hewitt's Health and Welfare Outsourcing leader.
Most of us, she says, still prefer getting health insurance through an employer.
"The No. 1 reason is you get to pay pre-tax for health insurance, and that's a savings for most people," she says. "The second reason is that health insurance is really complex."
Large employers have experts on staff or can afford to hire consultants to sort through plans and find the best coverage.
Those who've lost their jobs and are interested in COBRA should contact their former benefits office.
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