The White House has proposed extending a key health insurance subsidy through the end of the year, as workers nervously eye a Feb. 28 deadline after which they would not receive assistance for purchasing health insurance if laid off.
As part of the American Recovery and Reinvestment Act passed nearly one year ago, the federal government picked up some two-thirds of the cost of COBRA health insurance coverage that would otherwise fall on the shoulders of people who lost their jobs, if they chose to remain on their employers”™ health plan.
For some cash-strapped families, the absence of that subsidy could mean dropping health insurance altogether, putting pressure on hospitals that would then have to pick up the cost of care provided in the event of an injury or sickness.
Congress has since twice extended the bill as the recession has dragged on, and has also extended the benefit period from nine months to 15 months. If President Obama gets his way, the newest extension would cover workers laid off for the remainder of this year.
Despite the unemployment rate flattening in the fourth quarter, several local companies have announced large layoffs, including Norwalk-based Xerox Corp., which timed its job cuts to occur mostly in the fourth quarter; Stamford-based Pitney Bowes Inc.; and the Danbury Plaza Hotel & Conference Center. At the other end of the state, General Dynamics Inc. is eliminating more than 500 jobs at its Electric Boat submarine yard in Groton.
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According to Hewitt Associates, use of COBRA doubled between February and August of 2009; and COBRA enrollments continued to rise in the fourth quarter according to several insurance carriers, including Wellpoint Inc., the Indianapolis-based parent of Anthem Blue Cross & Blue Shield, the largest carrier doing business in Connecticut with more than one million members.
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“COBRA membership rose slightly in the fourth quarter and comprised approximately 2.5 percent of our fully insured commercial membership at (yearend),” said Angela Braly, CEO of Wellpoint, in a conference call with investors in late January. Braly added that the company has priced its rates to account for the six-month extension of COBRA benefits.
With family health insurance premiums running more than $13,000 on average in Connecticut, the COBRA benefits have taken at least a part of the sting out of the job search process. In Connecticut, the average duration of unemployment has risen to 30 weeks, up more than a third from the previous high in the early 1980s.
For people whose layoff is covered under the federal Trade Adjustment Assistance Act ”“ with the federal government having determined they lost their jobs due to foreign competition ”“ they can qualify for the health coverage tax credit, which pays 80 percent of health insurance premiums.
In the past few months, TAA benefits have been extended to some 200 Hubbell Inc. workers in Orange, Bridgeport, Milford, Newtown and Stonington; and to 40 former employees of Eastman Kodak Co. in Norwalk.
Still, relatively few employees are certified for TAA premium assistance, making COBRA the key component of the state”™s efforts to assist job seekers.
“This bill was critical to the continued safety and welfare of the thousands of Connecticut residents caught up in the terrible effects of the global economic downturn,” said Gov. M. Jodi Rell, in a written statement. “As I said in my letter to Senate leaders, it would have been a tragedy to allow urgently needed benefits to expire at the end of the year ”¦ As difficult as it might seem to make matters worse, allowing these important support systems to languish would have done just that.”
