Losing a job can be one of the most stressful and frightening things a person can experience – especially when your family is relying on your income. Employment termination is more than just the loss of a job. It also usually entails the loss of several other things, including self-confidence, holiday bonuses, a familiar environment, friendships at work, and – most importantly – health benefits. When you lose your job, you must decide whether you want to live uninsured and “hope for the best,” or if you want to buy private health insurance. And although many insurers do their best to provide affordable health insurance options, it can still be an overwhelming cost – especially for the unemployed. In order to offset that cost, the United States Government passed the Consolidated Omnibus Budget Reconciliation Act – COBRA. This program gives workers and their families who lose their health benefits the right to maintain their health benefits, as provided by the group health plan, for a specific period of time. To be eligible for COBRA, one of the following circumstances must apply:

• Voluntary or involuntary job loss

• Reduction of hours worked

• Transition between jobs

• Death

• Divorce

• Other significant life events

At first glance, this is a great program. The loss of health benefits can be extremely detrimental to an individual or a family – especially if prior health problems exist. So it’s really great that individuals and families have the option to maintain their coverage for up to 18 months while they look for a new job with health benefits. However, all good things typically come at a pretty significant cost – and COBRA is no exception.  For COBRA coverage, you must pay 102% of the premiums. And with the cost of health insurance steadily rising, that’s no easy task. Look at it this way… According to a recent report by Families USA, the average COBRA premiums for a family are about $1,069 per month, while the average unemployment benefits received for a family are about $1,278 per month. COBRA accounts for 83.6% of the unemployment benefits. And the average COBRA premium for an individual usually accounts for 30% – 40% of their unemployment benefits. In nine states, COBRA premiums for a family equaled or exceeded unemployment benefits.

How is this possible? If an unemployed family is using all – or even 83% – of their unemployment benefits for COBRA coverage, how can they afford to eat, drive, or pay for their home? How would any family be able to devote this much money to their health insurance? COBRA premiums have increased to such a high rate that it’s nearly impossible for the average American to afford. So although COBRA health coverage is a great option, we would strongly recommend that you look into a private individual or family health insurance plan first. Although health insurance costs are not cheap, you should certainly be able to find a plan more affordable than COBRA coverage. Unfortunately, though, people with pre-existing health conditions will probably be unable to find health insurance coverage from any insurer. In that case, COBRA coverage may be your only option.

Ron Pollack, the executive director of Families USA, put it quite perfectly: “COBRA health coverage is great in theory and lousy in reality . . . For the vast majority of workers who are laid off, they and their families are likely to join the ranks of the uninsured.” More affordable COBRA health insurance coverage is just one additional thing for Barack Obama to add to his health care reform “To-Do” list.

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