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It could become more affordable for laid-off workers to keep their employer-sponsored health insurance, thanks to a provision in the Covid bill passing through Congress.
Under the $ 1.9 trillion stimulus package, the government would pay for former employees to maintain health insurance from their old workplaces through COBRA or the Consolidated Omnibus Budget Reconciliation Act.
With COBRA, individuals who leave a company of 20 or more employees can typically continue with their workplace insurance plan for 18 months.
However, the option tends to be expensive as individuals now pay the entire cost of the plan without any corporate support.
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The average annual premium for work-related coverage in 2020 was $ 7,470 for individuals and $ 21,342 for family coverage, according to the Kaiser Family Foundation.
Now the government would subsidize these expensive premiums.
How many Americans would benefit is unclear.
According to a census, around 130,000 unemployed adults of working age were insured through COBRA in 2017. But that was of course before the pandemic shot up unemployment. And again, many people don’t choose coverage because of the cost.
With the grant, “potentially dramatically more people will sign up,” said Caitlin Donovan, a spokeswoman for the National Patient Advocate Foundation.
Here’s what you need to know.
Who Would Qualify for the Grant?
You would be eligible if you involuntarily quit a job that offers health insurance and you don’t qualify for another employer plan or Medicare, Donovan said.
“You would even qualify if you turned down COBRA beforehand,” Donovan said. All family members on your plan would also be fully insured.
You should receive written notification of your eligibility, likely from the Department of Labor, she added.
How does the grant change my costs?
The stimulus package passed by parliament in late February said the government would take over 85% of the COBRA premiums. When the Senate approved the bill this month, it increased that grant to 100%. The legislation now goes back to the House, which no major changes are expected from.
Beyond the premiums, you could still be hooked for co-payments and deductibles.
How long would the grant last?
The subsidy is expected to start in early April and last through September. Typically, you can’t be with COBRA for more than 18 months, so some people may be cut off earlier than September.
Once you receive notification of your eligibility for COBRA, you will likely need to register within 60 days.
When does reporting by COBRA make sense?
The main downside to COBRA is usually the cost of laid-off workers, so the relief calculator may be able to remove this barrier. One of the greatest advantages is that you can keep your current doctors and health care providers.
Other insurance options for the unemployed include Medicaid and purchasing a plan on the Affordable Care Act market.
Medicaid can be useful if you anticipate your financial problems will persist and you will not receive any monthly rewards either.
Some workers who lost their professional cover at the beginning of the pandemic and are already enrolled with Medicaid or in the marketplace may prefer to stay in that cover to avoid further transitions in cover.
Director of Health Programs at UC Berkeley Center for Labor Research and Education
With the COBRA subsidy, you might find that you are paying less to keep your employer coverage than you would with a market plan, Donovan said, “especially if you were higher-income and therefore did not qualify for subsidies under the Affordable Care Act.” (However, the Aid Act is also expected to extend market subsidies to more people.)
If you’ve already met your deductible for the year, COBRA could be even cheaper compared to other plans, experts say.
Still, the subsidies could be late for many people, said Laurel Lucia, director of health programs at the University of California’s Berkeley Center for Labor Research and Education.
“Some workers who lost their professional cover at the beginning of the pandemic and are already enrolled with Medicaid or in the marketplace may prefer to stay in that cover to avoid further cover transfers,” Lucia said.