Feeling the bite of COBRA
COBRA allows former employees to pay to continue their health care coverage after they've left their job. But as Sally Herships reports, the costs of the program can make it difficult for some families to see the benefits.
Stethoscope and $5 bills (iStockPhoto)
More on Health, America's Financial Crisis
TEXT OF STORY
Tess Vigeland: As fallout continues from the economic crisis, the House passed its version of a stimulus package this week: $819 billion dollars in spending on infrastructure, tax cuts and help for struggling state governments. Also buried in the 647-page bill: an expansion of COBRA health care coverage.
If you've ever left a job, you've heard of COBRA. You get to keep your health care plan, but you also get to pay for it. The new provision would require employers to offer COBRA for at least a decade instead of the current 18 months.
But as Sally Herships reports, COBRA's financial bite is enough to make anyone sick.
Sally Herships: Andrew Garda is taking a risk -- a big one. The cost of his family's health insurance was too much to bear, so Garda and his wife Melina opted to leave their kids uncovered for three months. Garda says after that their two sons can qualify for health care from the state of California. Now no one in the family is covered.
Andrew Garda: I'm making a choice for myself, my wife's making a choice for herself and that's one thing. But, you know, we're talking about our kids and that's a choice that we have to make for them and that's kind of scary.
Garda worked at an animation company in Los Angeles. About a year ago, the production he was on wrapped up.
Garda: When I first left my job, my wife was making significantly good money.
So Garda decided to stay home with the kids and try his hand at writing. But because his wife Melina was a freelancer, they were on their own when it came to health care.
Garda: We ended up having to go with COBRA. We thought we might have to do it short term, just found we couldn't get health care anywhere else.
The Gardas have pre-existing conditions. Their younger son had recently fractured his skull. Melina has chronic back problems. No private company wanted to cover them. They had no choice but COBRA.
Garda: I was happy that we had it because I think we were coming off of being rejected by health care providers and we're just like, "Well, at least we know that our kids can be covered."
Footing the bill for health care costs without help from an employer can be a shock, but it's an issue a lot of families are facing right now and one the Gardas thought they had under control.
Garda: When we first started, it was affordable -- if you can call $1,500 a month affordable.
Then Melina got laid off and Andrew couldn't find work. Their savings were gone quickly.
Garda: Occasionally it was pay for COBRA and pay other bills late. You start really wondering where you're ranking your health care as a necessity.
The Gardas were forced to choose between paying for COBRA and keeping the lights on in their home.
Sandy Praeger: And those are just choices Americans shouldn't have to make.
Sandy Praeger is the Kansas state insurance commissioner. She also helps the national government regulate insurance and protect consumers. She says there are 45 million Americans without insurance and even though health care is pricey, she says it's important to stay covered.
Praeger: It doesn't take long to run up a very, very, very high hospital bill, hundreds of thousands of dollars.
But footing the entire bill for your health care is expensive too and Praeger says COBRA is really only meant as a stopgap. But there are alternatives, like state plans for people with chronic medical conditions and private plans that only cover emergencies.
Praeger: You can go out and find catastrophic coverage for maybe $300 or $400 a month.
But it's still a gamble. Praeger says the deductibles on these plans are so high you need to be prepared to fork over thousands. And again she says, COBRA is only meant as a temporary fix.
Herships: So you've got to find a job?
Praeger: You've got to find a job, yeah.
After struggling to keep up with payments, the Gardas are in debt -- $13,000. I asked Andrew Garda if COBRA were a medication what he thought the label might say.
Garda: Side effects may include extra costs, draining of bank account and some hard choices.
Choices like deciding to move. The Gardas are headed from LA to Sacramento to live with family. They're hoping the change will remedy their dire economic situation.
I'm Sally Herships for Marketplace Money.
Comments
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From Shenandoah, PA, 02/23/2009
I have been on Cobra coverage for the last 18 months after leaving my job at a large bank. The coverage is set to end Feb. 28th 2009. Under this new program do I have the option of continuing with the cobra plan for more time? Does anyone have any info on this. It is actually cheaper for me to stay on Cobra if I can than to convert to the same insurance as an individual. Thank you for any help you can give.
From Bothell, WA, 02/06/2009
I have used COBRA too, and it is incredibly expensive. Mine was $1400/month. HOWEVER, I can get a health insurance policy to cover me and my two children for about $280/month. Yep, it's a "catastrophic" policy but folks, let's do the math. With this policy we each get 4 doctor visits a year for $35 each (no deductible there) and after that or for any hospitalizations, I need to meet the $2500 deductible before insurance kicks in. But if one of my kids or I wind up really sick or badly injured, once I've paid a total of $7500 out-of-pocket, the insurance company pays at 100%. Now, how many months of saved up COBRA payments before I'd have enough in the bank to cover that? AND I only have to pay that if a health disaster hits. It's not like I'm required to pay the deductible just because I have the insurance.
I found this story misleading. The report took an all-or-nothing position. Why didn't the Gardas get one of these policies and with the money they saved on COBRA payments they would've had any possible deductibles covered? I think the public does not understand enough about their insurance options and this story continues to keep the subject clear as mud.
From IL, 02/04/2009
Like the Gardas, I had pre-existing conditions which kept me on COBRA for almost 3 years after my divorce. Insurance companies refused to offer me an individual health insurance plan. As a woman in my mid-30s and I was paying $612 per month for COBRA. (more than half of a paycheck) And like the Gardas I was thousands of dollars in debt while paying for COBRA insurance.
From Los Angeles, CA, 02/02/2009
The website link that some of you have been looking for was mentioned in the interview with Kiplinger's Kimberly Lankford. http://marketplace.org/lankford
I've now posted it on this page, above, as well.
From MI, 02/02/2009
Where is the link for state insurance programs that was mentioned on the program? I work in a helath care office and would like to offer this information to our under and un-insured pateints. Thanks.
From Saratoga Springs, NY, 02/02/2009
During the piece on Cobra a website was to be posted on your website.I'm sorry but I couldn't find it.Would you please foward it to me.
From Holland, MI, 02/01/2009
I listened to the story on Cobra and it just made me crazy. I raised three children as a self employed, single parent without health insurance. Many medical expenses, incurred and at that time there was nothing I could afford and no help for people in my income.
No one cared. Now that more people are losing their jobs, (health insurance) and economic downturn, the sympathy is pouring in. Maybe these hard times will have a positive outcome. A little empathy for those who have been suffering all along.
From Essex, MA, 02/01/2009
I listened again. Coverageforall.org
From MA, 02/01/2009
The "COBRA" story this morning was very sad. When will we fix the health care system in this country so all people are covered? Health insurance should not be tied to employment. Medicare has covered the elderly for many years; it should be expanded to cover everyone - a single payer plan. Health care should not be driven by the insurance industry. I hope the new administration fixes this sorry system ASAP.
From durham, NC, 02/01/2009
Please post the web link to the organization that has information on state health insurance.
From Arlington, VA, 01/31/2009
During the piece on COBRA, Ms Herships said that the web address for a web page dealing with health insurance would be on the Marketplace Money web site. I have search for more than 5 minutes without success. Where would I find this information other than relistening to the broadcast?
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