End to COBRA Help Means More Pain for Jobless Families

As Marketwatch and the Wall Street Journal’s Health Blog both report, some families with unemployed workers will face significantly higher health care costs if Congress fails to renew a Recovery Act provision that has made COBRA coverage more affordable.

Under COBRA, people who lose their jobs can maintain their job-based coverage for up to 18 months.  But they must pay a significant amount of money out of pocket — the full cost of the premium (including their former employer’s share) plus 2 percent for administrative costs — and most unemployed workers simply can’t afford it.

That’s why last year’s Recovery Act created a temporary tax credit worth 65 percent of the cost of COBRA coverage, good for 15 months from the time a worker loses his or her job.

Unfortunately, the credit expired at the end of May (though families receiving the credit at that point can still get their full 15 months’ worth).  The chart shows what a difference that will make for families that lose their jobs from now on:

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While both the House and Senate have passed separate bills extending the COBRA tax credit through December, the House dropped the COBRA extension from the jobs bill it passed last month.  Unless the Senate restores the extension when it takes up the House bill, many workers who are laid off now will receive no help with their COBRA premiums and will likely end up uninsured.