COBRA Subsidies About to End for Thousands of Californians

COBRA Subsidies About to End for Thousands of Californians

COBRA subsidies from the American Recovery and Reinvestment Act (ARRA) passed in February 2009 are about to run out for people who started receiving it 9 months ago. Over a million Californians rely on the subsidy to continue their health care coverage, which pays 65% of their monthly COBRA premium.

COBRA, the Consolidated Omnibus Budget Reconciliation Act passed in 1985, allows involuntarily laid-off workers to continue their health coverage for 18-36 months by assuming the premium payments formerly paid by their employers. These monthly insurance premiums, however, after almost 25 years of health care inflation, are often bigger than unemployment checks.

When the economy went downhill last year, and the unemployment rates skyrocketed, Congress approved this subsidy to help the millions of people who lost their jobs between Sept. 2008 and Dec. 2009 continue their health coverage for the short-term. The first recipients from 9 months ago are now starting to lose their subsidies, and unless Congress extends the program, more subsidies will expire each month through fall of next year.

Also, unless Congress acts, people who loose their jobs in 2010 won’t receive a similar subsidy. Because of the high premium costs, many of these people will most likely become uninsured.

Families USA recently released a report with a state-by-state estimate of the average COBRA premium, average amount covered by the federal subsidy, and the average monthly unemployment check. In California, the average monthly COBRA premium is $1,107, about $720 of which is covered by the federal subsidy. Unemployment compensation amounts to an average of $1,349 a month. This leaves little left over if an unemployed Californian choses COBRA coverage and does NOT receive the federal subsidy.

The federal  subsidies (which people may qualify for through Dec. 31, 2009) also apply to people who qualify for Cal-COBRA, California’s “mini-COBRA” program for employees laid off from companies with fewer than 20 workers.

For more information, see the Families USA report, Expiration of COBRA Subsidy (PDF).

For general info, see our sections on COBRA and Cal-COBRA.

Our blogger Karen J. Fletcher is CHA's publications consultant. She provides technical expertise, writing and research on Medicare, health disparities and other health care issues. With a Masters in Public Health from UC Berkeley, she serves in health advocacy as a trainer and consultant. See her current articles.