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Insurance Eludes Laid-Off Workers

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The Associated Press

Published: January 10, 2009

WASHINGTON - Newly unemployed Americans will have to spend about 30 percent of their jobless benefits on average to pay for health insurance through their former employer, according to a new report.

And if they want coverage for their families, the report by Families USA says it will take more than 80 percent of their unemployment check.

When workers lose their jobs, they are usually eligible to maintain their health insurance coverage through their old employer if they pay the premiums, plus a 2 percent administrative fee. The benefit is referred to as COBRA insurance because of the law that established it.

As part of his economic stimulus package, President-elect Barack Obama is proposing to spend about $80 billion to extend unemployment benefits and to subsidize health care for people who have lost their jobs.

Families USA, a liberal advocacy group, says its report comparing average COBRA costs and unemployment benefits shows the need for the subsidy proposed by Obama.

At present, paying for COBRA borders on unrealistic for most people who lose their jobs. The cost cuts too deeply into their government-paid jobless benefits.

"This very important right is not meaningful in reality," said Ron Pollack, the group's executive director.

Continuing health coverage through former employers is particularly difficult for families. In nine states, the average family premium equals or exceeds unemployment benefits, the Families USA report said. Florida is among those states.
COBRA coverage is more affordable for individuals, but in six states, jobless workers would have to spend more than 40 percent of their unemployment insurance on COBRA premiums for individual coverage.

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