COBRA subsidies begin to expire

The first laid-off workers to get federal stimulus funds to help pay their health-insurance premiums are starting to see those subsidies expire.

Unless the subsidies are extended, millions of laid-off workers will probably go without health insurance, said Ron Pollack of Families USA, a Washington-based organization advocating health-care reform.

"I think we will see a real spike in the number of people who are uninsured," Pollack said in a briefing with reporters yesterday.

The premium subsidies are part of the American Recovery and Reinvestment Act. The subsidy is expected to benefit an estimated 7 million people, Pollack said.

State-by-state numbers are unavailable.

The federal subsidy provides laid-off workers nine months of premium assistance to continue health-insurance coverage through COBRA, or the Consolidated Omnibus Budget Reconciliation Act. The act includes provisions for workers to remain in an employer's group health plan for up to 18 months after leaving their jobs.

The catch: Employees may have to pay the entire premium plus an administrative fee, putting the benefit out of reach of many workers living on unemployment benefits.

The federal subsidy approved earlier this year as part of the stimulus package covers 65 percent of COBRA premium costs.

"It's been an extremely important provision to help people retain their health insurance after losing their jobs," said Jill Hanken, an attorney with the Virginia Poverty Law Center.

The federal subsidy program will continue to enroll newly laid-off workers until Dec. 31, with people eligible for nine months of benefits from the date of enrollment.

COBRA typically applies to larger companies, but many states have "mini-COBRA" laws covering workers at companies with less than 20 employees. The federal subsidy provision was written so that only states with mini-COBRA laws were eligible for the funds. Virginia was not one of them at first.

"The Virginia General Assembly . . . took action so that the COBRA subsidy would be available to former employees of small businesses," Hanken said.

Virginia's law, Hanken said, was written to cover affected workers for the nine months they are eligible for the federal subsidy.

COBRA has shortcomings, Pollack said. For instance, if an employer goes bankrupt, there is no health plan for laid-off employees to buy into.

Contact Tammie Smith at (804) 649-6572 or .