Congress has not renewed a subsidy that helped many jobless Americans afford health benefits. COBRA requires employers to continue insurance for former employees for 18 more months, if they pay the entire premium plus a 2% administrative fee. Last year, Congress approved a 65% COBRA premium subsidy, but it ended May 31.
People who started on COBRA before May 31 can still get the aid, but those who had exhausted the 15-month subsidy, and the newly unemployed, aren’t eligible.
Finding affordable insurance can be tough. The average price for family coverage is about $1,100 a month, with the subsidy, COBRA coverage costs $385.
Thus, there is a need for low cost high deductible options. The higher the deductible, the lower the premium cost and the lower the cost for COBRA. Now, more than ever, an employer that offers a high deductible HSA plan and contributes to the Health Savings Account of the employee is doing that employee a big favor. The money in a Health Savings Account can be used to pay the COBRA premium and keep the uninsurable employee covered once they have been let go.
For the short sighted employees used to the low copay options and using their medical plan without regard to cost, this new reality is a cold but very real wake up call. It’s time to manage your health and healthcare expenditures.