Average Cobra Cost For Individual - Karen Pollitz, Matthew Rae Follow @matthew_t_rae on Twitter, Cynthia Cox Follow @cynthiaccox on Twitter, Rabah Kamal, Rachel Fehr and Greg Young
The COVID-19 pandemic has upended the economy, caused massive job losses and disrupted health care for millions of people. an estimated 26.8 million of the 78 million people in families who experienced job losses on May 2 could have lost coverage at work and become uninsured.
Average Cobra Cost For Individual
The loss of coverage during a pandemic is particularly worrisome. In a previous analysis, we estimated that treatment costs for people hospitalized with COVID-19 could cost an average of $20,000, rising to more than $80,000 in more complex cases. Congress did not require free treatment for COVID-19 for the uninsured; however, the CARES Act created the Caregiver Assistance Fund, an unspecified portion of which will be used to reimburse providers treating uninsured patients with COVID-19. The significant loss of employer-sponsored insurance (ESI) also puts millions at risk of not being able to afford other health care. In late 2018, an /LA Times survey found that 54% of adults with ESI reported that someone in the household had at least one chronic illness, such as heart disease, serious mental illness, diabetes or cancer.
Cobra Election And Payment Periods: Does One Year Of 'tolling' Really Mean One Year?
Most of the 26.8 million people at risk of losing job-based insurance are eligible to remain covered under a federal law, the Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA). COBRA provides that if individuals lose job-based coverage due to a qualifying event, such as a layoff, they can continue to enroll in their existing group plan, usually at full cost to the enrollee.
COBRA applies to companies with 20 or more employees. If the qualifying event is termination of employment, individuals are generally eligible for COBRA continuation coverage for up to 18 months. (Other qualifying events, such as the death of a covered employee or loss of dependent status, make people eligible for up to 36 months of COBRA continuation coverage.) Generally, individuals have 60 days to elect COBRA continuation and an additional 45 days to choose to continue COBRA for his election. first premium dating back to their qualifying event. However, a recent emergency order issued by the Trump administration extends the period that people must elect COBRA and pay premiums to 60 days after the end of the national emergency period. For example, assuming the emergency period ends this summer on July 25, someone who received a COBRA notice on April 1 would have until the end of November to choose to continue. The emergency order also extends the amount of time employers must notify individuals of their right to elect to continue COBRA by the same amount (usually 30 days).
For most people, especially after losing a job, the cost of continued coverage with COBRA is prohibitively expensive. Individuals must pay the full cost of group health insurance (employee and employer shares), plus a 2 percent administration fee. In 2019, the average annual cost of employer-sponsored health coverage offered by firms with 20 or more employees was $7,012 for single coverage and $20,599 for family coverage.
The Medical Expense Panel Survey found that only about 130,000 unemployed non-elderly adults had health care coverage through COBRA in 2017, when more than 11.5 million elderly adults were unemployed. The proportion of unemployed and uninsured approached 30% that year. This suggests that unsubsidized COBRA does little to prevent loss of coverage among people who lose their jobs.
Buying Private Health Insurance
The high price of COBRA also encourages adverse selection—that is, people with the greatest health costs and risks choose it the most. According to our analysis, COBRA enrollees' average annual health care spending (combined out-of-pocket and plan spending) in 2018 was nearly double that of other large group plan enrollees ($11,695 vs. $6,144).
COBRA enrollees tend to be older than those enrolled in current job-based plans; On average, 33% of COBRA enrollees are 55 or older, compared to 21% of active employees. In addition, COBRA enrollees are more likely to have multiple chronic conditions (38% vs 24%) and more than twice as likely to report poor health (18% vs 7%) (Figure 1).
In the past, Congress has repeatedly provided partial subsidies for COBRA premiums for displaced workers. The American Recovery and Reinvestment Act (ARRA) of 2009 provided a 65% COBRA premium subsidy to help the unemployed remain enrolled in health care offered by their former employer. ARRA COBRA benefits were initially available to eligible individuals for up to 9 months; the eligibility period was later extended to 15 months. Eligible individuals had to pay up to 35% of COBRA premiums. The other 65% were paid by their former employers, who reimbursed them with a credit against their payroll tax liability. Eligibility for COBRA benefits has been phased out for higher-income individuals with adjusted gross income between $125,000 and $145,000 ($250,000 to $290,000 combined return). The final evaluation of the ARRA COBRA subsidy program found that 34% of eligible individuals chose subsidized COBRA coverage. The participation rate was highest among those with a higher income and higher education. 80% of eligible individuals who did not choose COBRA said cost was the most important factor in their decision, even with substantial subsidies.
In addition, ARRA modified COBRA's previous assistance program enacted in 2002, the Health Coverage Tax Credit (HCTC), specifically for workers who were laid off due to factors related to international trade and received trade adjustment assistance benefits and met other qualifications. When enacted, HCTC subsidized 65% of premiums for COBRA and certain other qualified health insurance options; ARRA increased the HCTC subsidy to 80%. A review by the US General Accounting Office (GAO) found that partial funding and complex eligibility rules discouraged HCTC use. About 5% of potentially eligible individuals benefited from the tax credit. After ARRA increased the HCTC subsidy, the GAO found that about 5.5% of potentially eligible individuals took out the credit.
Laid Off And Looking For Health Insurance? Beware Of Cobra
Recently, a fourth anti-coronavirus measure, the Act of Heroes, was passed in the House of Representatives. Includes a provision to subsidize 100% of COBRA premiums for workers who would otherwise lose job-based coverage due to job loss or reduction in hours worked. People who experience other COBRA qualifying events -- such as the death of a covered employee -- are not eligible for benefits. Additionally, for laid-off workers who have health care coverage during the wage suspension, the grant will also cover 100% of the worker's health care premiums (employers will still pay their share). Employers will cover the full cost of health care for eligible individuals, and will then be reimbursed against their payroll tax liability or through reimbursement. The subsidy can be claimed between March 1, 2020 and January 31, 2021 for COBRA coverage months. People will be eligible for the subsidy when they are eligible for other employer-sponsored health care or Medicare.
The analysis estimates that about 79% of people who have lost coverage at work and may become uninsured are eligible for Medicaid/CHIP (12.7 million or 47%) or subsidized marketplaces (8.4 million or 31%). About 5.7 million will not be eligible for subsidized coverage for various reasons.
Eligibility for coverage does not always mean enrollment. In 2018, more uninsured individuals eligible for subsidized marketplace subscriptions participated in such plans — 9.2 million uninsured compared to 8.6 million enrolled. In addition, 6.7 million uninsured adults and children were eligible for Medicaid or other government coverage that year.
When evaluating health insurance options, people consider differences in premiums, cost sharing and provider networks, among other things. In addition, knowledge of coverage options and the complexity of the application process primarily influence enrollment results. Subsidized COBRA would provide a new insurance option that could change the trade-offs people face and their ability to stay insured.
Why Employers Should Guide Non Benefits Eligible Employees To Public Sources Of Health Coverage
For the newly unemployed, unsubsidized COBRA will generally be the most expensive coverage option. In most states, Medicaid coverage does not require a premium. Marketplace packages are subsidized on a sliding scale for eligible individuals with incomes between 100% and 400% FPL; At all income levels, people must pay at least a portion of the benchmark plan's monthly premium, and the required premium payment approaches 10 percent of gross income at 300% FPL. If fully subsidized, COBRA premium costs for individuals would be similar to Medicaid and less (much less, depending on income) than the premium contribution required to purchase the average benchmark silver plan in the ACA Marketplace. (Figure 2)
Employer-based plans tend to have high annual deductibles. The average actuarial value of employment-based plans in 2017 was about 85%, slightly more generous than a gold level market plan. The average annual deductible for employment-based plans was $1,655 in 2019. Most employer plans do not change the deductible based on income.
Cost sharing is much higher under Marketplace plans. Benchmark silver plans have an actuarial value of about 70%, with an average deductible of $4,544. The costs
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