The Consolidated Omnibus Budget Reconciliation Act (COBRA) was approved by the federal government in 1985, but in the intervening 23 years thousands of Americans have found that the scheme isn’t as useful as it seems. Now, with the economic crisis putting millions out of work, the failings of COBRA are beginning to be revealed, in all their dubious glory.
Under COBRA, workers who lose their jobs can still retain the employer healthcare that job provided. They can retain the healthcare for up to eighteen months, but they must pay for the full price of upkeep once their employment terminates. While employed, they pay only a portion of the premium, with their employer footing the bill for the remainder. But after their employment is terminated, they’ll pay both shares.
It sounds like a great idea – and it works in theory – but the reality is that to maintain their healthcare after losing their jobs, the average worker must pay as much as 30% of their unemployment check. When a family, rather than a single person is involved, that figure can rise to an astonishing 84%.
Real Affects Felt By Real People
One case, cited by healthcare advocacy group Families USA, involved a Minnesota woman forced to rely on COBRA to maintain healthcare coverage for herself and her husband after she lost her job. Her monthly unemployment check amounted to $1,612, while the COBRA coverage bill was $1,200. In Arizona, the situation is even more dire – the monthly COBRA bill for a family is $1,084, and the average monthly unemployment check is just $937.
So clearly, there’s a big problem here, in that maintaining healthcare coverage after losing employment places an enormous financial burden, particularly for families. It’s no wonder that the ranks of the uninsured have swelled at such a staggering rate over the last year, just as the unemployment figures have been increasing.
COBRA’s Last Leg?
According to the Kaiser Family Foundation and Health Research and Educational Trust, a full 80% of workers who are eligible for COBRA don’t use it if their employment is terminated. Given the cost, it’s no surprise that more people aren’t using it. Many advocacy groups are hopeful that the new administration will address COBRA’s inherent failings, but in the meantime, increasing numbers of Americans are finding out first hand that the protection that COBRA was supposed to provide just isn’t there.
photo credit: Obama-Biden Transition Project