Divorce and Health Care for the Unemployed: More Help From Congress

More help for unemployed and divorced spouses


COBRA CONTINUATION HEALTH COVERAGE

In 1986, Congress passed the landmark Consolidated Omnibus Budget Reconciliation Act (COBRA) health benefit provisions. The law amends the Employee Retirement Income Security Act, the Internal Revenue Code and the Public Health Service Act to provide continuation of group health coverage that otherwise might be terminated.

WHAT COBRA DOES

COBRA provides certain former employees, retirees, spouses, former spouses, and dependent children the right to temporary continuation of health coverage at group rates. This coverage, however, is only available when coverage is lost due to certain specific events. Group health coverage for COBRA participants is usually more expensive than health coverage for active employees, since usually the employer pays a part of the premium for active employees while COBRA participants generally pay the entire premium themselves. It is ordinarily less expensive, though, than individual health coverage.

Under COBRA, participants, covered spouses and dependent children may continue their plan coverage for a limited time when they would otherwise lose coverage due to a particular event, such as divorce (or legal separation). A covered employee’s spouse who would lose coverage due to a divorce may elect continuation coverage under the plan for a maximum of 36 months. A qualified beneficiary must notify the plan administrator of a qualifying event within 60 days after divorce or legal separation. After being notified of a divorce, the plan administrator must give notice, generally within 14 days, to the qualified beneficiary of the right to elect COBRA continuation coverage.

EXTENDED COVERAGE PASSED BY CONGRESS

Congress, under pressure to provide additional help for people who have lost their jobs and health benefits, passed legislation to extend federal subsidies to help people pay for their former employer’s health insurance. Lawmakers also agreed to extend the eligibility period to sign up for assistance.

As part of the stimulus bill passed in February 2009, the federal government subsidized 65 percent of the cost for unemployed people who opted to continue their employer’s health insurance coverage. A person can pay to stay on his or her former employer’s group policy — generally for a maximum of 18 months - through the Consolidated Omnibus Budget Reconciliation Act, a federal law better known as Cobra.

But the assistance program was open only to people who lost their jobs through the end of 2009, and the subsidy lasted only nine months, so starting Dec. 1 2009, many people were faced with ending their insurance coverage or paying the full amount.

CONGRESS EXTENDS ELIGIBILITY FOR THE UNEMPLOYED

The new law extends the eligibility to sign up for the program through the end of February 2010, so people who are laid off in January and February will qualify. It also adds six months of subsidies, extending coverage assistance for a total of 15 months.

The Senate passed the legislation on Saturday to extend the program as part of a $636 billion defense spending measure, which was signed by the president later that day.

The House had passed the proposal last week.

Without subsidies, the average monthly Cobra payment for a California family is $1,107, similar to the national average, according to Families USA, a consumer advocacy group. With the federal subsidy paying 65 percent of the cost, that payment drops to $388.

The extra help is important because even if a health overhaul bill is passed before the end of the year, it's not likely to help people immediately, said Anthony Wright, executive director of Health Access California, a consumer advocacy group.

Early Monday, Senate Democrats prevailed 60-40 in a procedural vote that showed they had the votes they need to pass the Senate's overhaul bill.

The measure, which is on track to be passed before Christmas Eve, would still have to be reconciled with the health care bill passed by the House in November.

"This is an important bridge, not just for folks who are unemployed but those who find their new job or temporary job and do not have health coverage," said Wright, adding that many of the key proposals in a reform bill won't go into effect for several years.

Wright said the extra aid is especially helpful for those in California, where the unemployment rate was 12.3 percent last month. The national average is 10 percent.

MORE INFORMATION ON YOUR COVERAGE

Divorced spouses may call their plan administrator or the EBSA Toll-Free number, 1.866.444.EBSA (3272) if they have questions about COBRA continuation coverage or their rights under ERISA.