NEW YORK -- Because most Americans depend on their employers for health insurance coverage, losing a job can also mean losing this important company benefit.
The solution for many is COBRA, the acronym for the extended health care coverage made available under the Consolidated Omnibus Budget and Reconciliation Act of 1986.
It generally lasts just 18 months, and it's not cheap. But experts say it is something even financially pressed families should consider.
"It's obviously very hard when you're unemployed, but health coverage has to be one of the highest priorities for a family," said Gail Shearer, director of health policy analysis for Consumers Union in Washington, D.C. "You never know what is going to happen, and you don't want to be exposed to catastrophic costs that can bankrupt you."
COBRA allows workers to continue their employer health care coverage after they've been laid off or voluntarily left a job. In some cases, workers also will qualify if their hours have been cut to the point that they lose health benefits.
A COBRA option must be made available by companies with 20 or more employees, though 38 states have adopted similar mandates for companies with as few as two workers.
Plan administrators are required to notify former employees of their eligibility, and the former worker has 60 days to accept.
So far so good. The stumbling block very often is the cost -- the former employee must pay the entire premium amount and, often, an additional 2 percent administrative fee.
It typically costs more than $7,000 a year for family coverage, said Ron Pollack, executive director of Families USA, a nonprofit consumer health care advocacy group in Washington, D.C. For singles, it will be between $2,600 and $2,700.
As a result, just 20 percent of eligible workers take advantage of COBRA, he said.
"Seven thousand dollars a year is expensive in the best of times," Pollack said. "In the worst of times, when you don't have a job, it's very, very hard."
But going without health coverage "is like playing Russian roulette," he added. "If something unexpected occurs, you're in trouble."
Congress has been debating ways to try to cut the costs for the growing ranks of the nation's unemployed -- including the 1 million workers who lost jobs in the recession last year -- but hasn't agreed on how to do it. Republicans favor a tax credit to help laid-off workers buy their own policies; Democrats would subsidize three-quarters of COBRA costs.
Losing a job isn't the only time families look for COBRA coverage.
"One of the primary reasons we see people elect COBRA is when they're quitting their job to start their own business," said Don Hardin, a human resources consultant with William M. Mercer Inc. in Charlotte, N.C. "Instead of going out and trying to get an individual policy, especially if there's any kind of health condition, they'll elect COBRA to tide them over."
Workers taking early retirement also can use COBRA to bridge the gap until they're eligible for Medicare, he said.
And workers voluntarily changing jobs may use it to cover their insurance needs until they qualify for coverage at their new job. "For midcareer, senior management hires, the (new) company will sometimes pay for it," Hardin said.
Hard-pressed unemployed families seldom have other options.
Private insurance generally is much more expensive than the group plans available through companies, and if anyone in the family has a health problem such as asthma or diabetes, it could be hard to get coverage at all.
Shearer of Consumers Union says workers who lose their jobs should first look to see if they can get coverage through a spouse's workplace.
They also should check eligibility for state-run health care programs such as CHIPs -- Children's Health Insurance Programs -- or Medicaid.
The National Association of Insurance Commissioners maintains a Web site, www.naic.org, with links to all 50 state insurance agencies.
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