5 On Your Side

COBRA insurance too expensive for most people

Posted January 22, 2009 5:34 p.m. EST
Updated March 9, 2009 5:12 p.m. EDT

— During a weak economy, most of us have at least thought about what would happen if we lost our jobs. But chances are, we have not thought much about the cost of losing our health insurance.

Most of us who have benefits from our employers probably don't pay much attention to how much health care really costs. However, if you lose your job you will likely quickly become aware of COBRA.

By law, employers with 20 or more employees must offer COBRA continuation health coverage. It allows former employees to keep health insurance benefits for up to 18 months. However, the employee has to pay the full premium, plus 2 percent.

“All I can do is just kind of give people information about what they're in store for. And it's not a good picture,” said Bob Harvell, with the North Carolina Department of Insurance.

The monthly premium for an average-size family in North Carolina is $1,028. That is more than 82 percent of the average monthly unemployment benefit. Harvell says most people simply can't afford COBRA.

“If they're still paying mortgages and car payments and things like that, and all of a sudden here comes the bill for the health insurance that they've got to pay on their own, that the employer used to pay, yeah, that's a real eye-opener and most of them will say, 'We can't do that,'” Harvell said.

Unfortunately, there aren't many other options. Depending on your age and health, you might be able to get a less-expensive individual private health insurance policy. Opting for less coverage can save some money as well, but many people still can't handle the cost, so they go without health insurance.

“If you can't afford to purchase insurance, the only government-sponsored program we have is the Medicaid system. And you and I both know that most people don't qualify under the guidelines of Medicaid,” Harvell said.

Medicaid serves low-income parents, children, seniors and people with disabilities.

If you don't qualify for Medicaid and can't afford COBRA, there aren't many options, and these days a lot of people are looking for health care alternatives, Harvell says.

"And some even weep over the phone because of the seriousness of what they are looking at to pay," he said.

The solution most people hope for is to quickly find another job. They know that if they have a medical emergency, or just need a doctor's basic care, they can probably only afford it if they are covered by health insurance.

A new option, Inclusive Health, also known as the North Carolina Health Insurance Risk Pool (NCHIRP), began Jan. 1. It's for people with pre-existing conditions, people who finished their 18 months of COBRA, and people who can't get COBRA. Premiums range from $200 to $1,500 a month depending on age, gender and smoking status.

To learn more about NCHIRP, visit the Web site's frequently asked questions section or call 866-665-2117.

The name COBRA, by the way, is a bit odd. It has nothing to do with health or snakes. It comes from Consolidated Omnibus Budget Reconciliation Act, a 1986 federal spending bill into which the health insurance requirement was inserted as a way to be sure it would pass Congress.