Healthcare and Unemployment

Though healthcare reform is in the works, healthcare benefits remain a major concern for many who are unemployed today; however, options to continue coverage exist for those who have been laid off. For example, COBRA allows an exiting employee to continue coverage with their former employer by paying slightly more than the full cost of the benefits.

Preparing for a job search is often stressful and, during the current economic climate, remaining upbeat and confident can be challenging. The fear of the costs of an injury or illness can create an added level of stress that may negatively impact multiple aspects of a job seeker's life.

While the high cost of healthcare has often proved cost prohibitive for those unemployed, according to a recent MSNBC article1 there is an option available for those who have been laid off; many job seekers and companies, however, are not aware of it. The American Reinvestment and Recovery Act of 2009 (commonly referred to as the Economic Stimulus Package) includes a 65% discount on COBRA coverage. Unfortunately, there is a great deal of misinformation about the subsidized discount; in fact, even those who know about it — and actually qualify — are often told that they do not qualify. The misinformation comes, for the most part, from the fact that the subsidy became available quite suddenly earlier this year and most HR departments were not subsequently informed.

Here are some helpful tips to help job seekers start off on the right foot in taking advantage of the discount.

First of all, the health plan must qualify for COBRA Continuation of Coverage, which is based upon three main factors: (1) the former company must be large enough (20+ full-time employees in the previous year), (2) the individual must have been covered at the time they left (not "opting out"), and (3) a qualifying reason for end of coverage (basically, anything but being fired for gross misconduct).2
Second, the former employee must have been laid off between September 1, 2008, and December 31, 2009, and not qualify for a spouses plan or Medicare coverage.3
Third, job seekers should plan on explaining the discount option to their employer and then follow through to ensure that they are not wrongly denied. In fact, if a request for the COBRA or the discount is denied, individuals can appeal to the Department of Labor. Of the nearly 6,500 jobless initially denied the subsidy, 75% were approved during the appeal.1

Also, if you were laid off from an organization with fewer than 20 employees, many medical insurance companies offer medical continuation (but typically for a shorter period of time).

The bottom line is that continuing health benefit coverage may help eliminate the stress of job searching, and the American Reinvestment and Recovery Act of 2009 provides some relief to address this. And that means more energy to focus on finding the right job!