Health insurance for the unemployed often unaffordable

Washington -- Health insurance coverage for unemployed Americans is becoming increasingly out of reach, according to an analysis released Jan. 9 by the consumer advocacy group Families USA.

Americans who quit or lost their jobs for reasons other than misconduct are eligible for a temporary continuation of health insurance at group rates through the Consolidated Omnibus Budget Reconciliation Act of 1986, or COBRA. Dependents and spouses also are eligible for coverage extension under certain conditions.

Nationwide, unemployed individuals in 2008 received an average of $1,278 a month through state-managed unemployment assistance programs, according to the report, "Squeezed! Caught Between Unemployment Benefits and Health Care Costs." Maintaining individual health insurance through COBRA would have required about 30% of that, on average. Family coverage would have consumed more than 80%.

"For the vast majority of workers who are laid off, they and their families are likely to join the ranks of the uninsured," said Families USA Executive Director Ron Pollack.

Monthly unemployment checks ranged from $800 in Mississippi to a maximum of $1,698 in Massachusetts. The cost of COBRA coverage exceeds available unemployment assistance in nine states: Alabama, Alaska, Arizona, Delaware, Florida, Louisiana, Mississippi, South Carolina and West Virginia, the report said.

COBRA participants generally pay the full cost of premiums, with no employer contribution. But the coverage is still cheaper than individual market plans, the Labor Dept. said.

America's Health Insurance Plans recognizes how expensive COBRA coverage can be for people going through a job transition, said AHIP spokesman Robert Zirkelbach. Congress should consider financially assisting those seeking such coverage or reforming COBRA to allow a variety of health insurance options, including more affordable plans, he said.

Meanwhile, job losses continue to mount. The number of unemployed Americans climbed to 7.2%, or 11.1 million, in December 2008. That's an increase of 2.3%, or 3.6 million, since the economic recession began in December 2007, according to Labor Dept. figures released Jan. 9.

The Families USA report is available online (link).