Wall Street Journal: Stimulus Makes Cobra Coverage a Better Bet

From the Wall Street Journal: Congress has just given a big assist to millions of jobless Americans facing a tough decision: Do they reach into their wallet to continue health insurance coverage with their old employer or not?

As part of the economic-stimulus package signed into law this week, the federal government will provide a nine-month subsidy covering 65% of the Cobra premium for people who qualify. Eligible workers who originally opted not to take Cobra but who now want the subsidized version have 60 days after they receive notice from their employers to sign up, says Richard G. Schwartz, a benefits lawyer in New York.

Fewer than one in 10 eligible workers recently opted for continuing insurance coverage in 2007 under Cobra, the federal law that allows many workers to continue group health insurance when they leave a job. The big reason: Cobra is expensive. Under the law, workers must pay the entire premium -- plus a 2% administrative fee -- even though employers typically picked up the lion's share of the cost. The average cost of Cobra coverage for a family is $13,000 a year -- big money for someone who is unemployed.

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