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COVID-19

Lost health insurance? COBRA’s an option, but it isn’t cheap

Mitchell Hartman May 13, 2020
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Drive-up coronavirus testing in Culver City, California. Many people have lost their health coverage along with their jobs. Kevin Winter/Getty Images
COVID-19

Lost health insurance? COBRA’s an option, but it isn’t cheap

Mitchell Hartman May 13, 2020
Heard on:
Drive-up coronavirus testing in Culver City, California. Many people have lost their health coverage along with their jobs. Kevin Winter/Getty Images
HTML EMBED:
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More than 33 million Americans have filed for unemployment benefits since mid-March, more than one in five workers who had a job before the pandemic.

And in the U.S. economy, where employer-provided health insurance is the norm, losing a job often means losing coverage, sometimes for the worker’s entire family.

The Economic Policy Institute recently estimated that nearly 13 million laid-off workers have lost their employer-provided health insurance.

EPI research director Josh Bivens said that fewer than half of all workers receive health insurance from their employer, and COVID-19 has hit the hardest among workers with low pay and meager benefits. “Job losses so far in this crisis have been pretty concentrated in sectors like accommodations and restaurants that don’t tend to offer employer-provided health insurance,” he said.

Workers who get their health insurance through their employers can keep it. Under a provision of federal benefits law called COBRA, most employees who lose or leave a job can remain on their employer’s health plan for at least 18 months.

But it isn’t cheap.

“Very few people sign up for COBRA,” said Matthew Rae, associate director of the Health Care Marketplace project at the Kaiser Family Foundation. “And the reason is, it’s unbelievably expensive. The worker’s got to pay the full cost, so you end up paying — for a family of four — somewhere north, on average, of $20,000 a year.”

Kaiser calculated that COBRA for a family of four on a large employer’s health plan would cost $22,885 a year. That includes the employer premium (typically 80 percent of the total) of $15,159, the employee premium of $4,706, out-of-pocket costs of $3,020, plus a 2% administrative fee.

Some companies are continuing to pay their portion of the health insurance premium for workers on furlough.

Ohio preschool teacher Cinnamon Deutsch has been furloughed without pay since late March. She pays $120 a month out of pocket to maintain her health insurance — the same employee contribution that was deducted from her paycheck when she was working.

Deutsch said it’s an amount she can afford, since she’s receiving unemployment benefits, including a $600-per-week federal pandemic benefit under the CARES Act.

“I’m one of the people that sort of lives paycheck to paycheck,” Deutsch said. “So now I can have a little nest egg in case my car breaks down or whatever.”

COVID-19 Economy FAQs

What do I need to know about tax season this year?

Glad you asked! We have a whole separate FAQ section on that. Some quick hits: The deadline has been extended from April 15 to May 17 for individuals. Also, millions of people received unemployment benefits in 2020 — up to $10,200 of which will now be tax-free for those with an adjusted gross income of less than $150,000. And, for those who filed before the American Rescue Plan passed, simply put, you do not need to file an amended return at the moment. Find answers to the rest of your questions here.

How long will it be until the economy is back to normal?

It feels like things are getting better, more and more people getting vaccinated, more businesses opening, but we’re not entirely out of the woods. To illustrate: two recent pieces of news from the Centers for Disease Control. Item 1: The CDC is extending its tenant eviction moratorium to June 30. Item 2: The cruise industry didn’t get what it wanted — restrictions on sailing from U.S. ports will stay in place until November. Very different issues with different stakes, but both point to the fact that the CDC thinks we still have a ways to go before the pandemic is over, according to Dr. Philip Landrigan, who used to work at the CDC and now teaches at Boston College.

How are those COVID relief payments affecting consumers?

Payments started going out within days of President Joe Biden signing the American Rescue Plan, and that’s been a big shot in the arm for consumers, said John Leer at Morning Consult, which polls Americans every day. “Consumer confidence is really on a tear. They are growing more confident at a faster rate than they have following the prior two stimulus packages.” Leer said this time around the checks are bigger and they’re getting out faster. Now, rising confidence is likely to spark more consumer spending. But Lisa Rowan at Forbes Advisor said it’s not clear how much or how fast.

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