Bankruptcy

Health Insurance for the Unemployed: A Costly Concern

By Chris Kramer

Thanks to the health care overhaul bills currently working their way through the U.S. Senate and House of Representatives, the high cost of health insurance in America is on the public?s mind. And now, with a key provision of the stimulus bill expiring this month, another aspect of the health care dilemma has come to the surface.

Job Loss and Health Insurance

Because many Americans get medical insurance through their employers, job loss can be a double blow, meaning the loss of income as well as coverage. To address this concern, lawmakers included provisions for health insurance in the stimulus bill passed in February:

• Subsidized coverage: The stimulus provided funds to reduce COBRA payments by 65 percent for those who wanted to keep their company?s health coverage after losing their jobs.
• Limited offer: Naturally, the government assistance came with boundaries: to be eligible, people must have been laid off between September 1, 2008 and December 31, 2009. Further, subsidized coverage only lasts for nine months.

Because the measure went into effect in March of this year, thousands of unemployed Americans are now facing huge jumps in the cost of their health coverage.

In fact, sources indicate that the average affected family will see their costs soar $722 per month ? from $389 to $1,111. In many states, that amounts to the vast majority of unemployment payments; in some states, it exceeds possible unemployment payments.

Hope on the Horizon: Bills in Congress

Luckily, the situation is not completely without hope. In fact, the Associated Press reports that Congress is currently considering bills that would add an additional $100 billion to unemployment benefits (including the COBRA subsidy).

Here?s a numerical breakdown of the proposed legislation:

• $85 billion would be funneled toward extending emergency unemployment payments
• $15 billion would fund the expanded health care coverage

In 2007, when unemployment hovered around 4.8 percent, about $43 billion was reportedly spent on unemployment costs.

While some measures of the economy suggest we?re pulling out of the worst of the recession, many experts still expect unemployment levels to remain high for another year or so, which means these problems likely won?t disappear any time soon.

Additional Resources

Special Report: Expiration of COBRA Subsidy (PDF)

Unemployed and Uninsured (PDF)

Full post as published by The Bankruptcy Blog on December 04, 2009 (boomark / email).