Cobra takes bite from health costs

Melissa Chang, former marketing director for Aloha Tower Marketplace, will have to hunt for medical insurance when her benefits expire in July.

Chang, 44, who was laid off in January 2009, will no longer have subsidized health benefits under the Consolidated Omnibus Budget Reconciliation Act, or Cobra, which allowed her to remain on her previous employer’s health plan.

"It’s more scary because I don’t know how much it’s going to cost, and I don’t know how much I can afford," said Chang, an independent social media consultant. "For me, I’m just single — I just fend for myself."

Others like Chang who were laid off toward the beginning of the recession will also lose Cobra coverage in the next few months. There were 42,550 unemployed in Hawaii as of April.

Cobra offers workers who lose their jobs continued health benefits under an employer’s group health plan for 18 months (36 months if you’re on disability). The only catch is the laid-off employee normally has to pay the full premium.

The average monthly Cobra premium for Hawaii families is $994, according to a report released this month by Families USA, a national organization for health care consumers.

The federal government, as part of the 2009 economic stimulus law, provided help with Cobra payments for people laid off between Sept. 1, 2008, and May 31. The help is in the form of a 65 percent discount for 15 months.

The subsidy brings down the average monthly Cobra premium for Hawaii families to $348, the study shows.

Without the subsidy, laid-off workers would need more than half of their unemployment benefits to cover health insurance.

A monthly Cobra payment of $994 means 54.8 percent of the average $1,815 monthly unemployment benefits would be consumed by Cobra premiums.

The 65 percent subsidy makes health insurance much more affordable but also adds to the federal budget deficit.

The subsidy ended on June 1. Congress is still debating whether to bring it back.

"There is an irony that a few months after the passage of health reform, the Cobra subsidy would come to an end," said Ron Pollack, executive director of Families USA. "Health reform will significantly expand health coverage starting in a few years from now, but in the meanwhile more and more people who lose their jobs will lose their health care coverage."

Many Hawaii residents might find themselves in just that position, unable to pay the full premium for health insurance.

Hawaii employers typically pay 100 percent of individual medical insurance premiums, according to Altres Inc., which handles human resources for 500 local businesses.

"It’s impossible for somebody who’s getting unemployment to take $300 for that (individual coverage) when I’ve got my mortgage to pay," said Kaimuki resident David Miller, 37, who has been uninsured since being laid off a year ago from his job as staffing and training manager at Marimed Foundation. "It’s taking a chance balancing whether I’m going to get hurt or putting food on the table."

But taking the huge risk of going uninsured is never a comfortable option.

Alternatives to Cobra include shopping around with the state’s major health plans, including the Hawaii Medical Service Association and Kaiser Permanente.

HMSA’s average monthly dues for an individual medical-only "conversion plan" is $328, slightly less than a small business-sponsored preferred provider medical-only plan at about $380.

Conversion plans are for people who were previously covered by an employer-sponsored HMSA plan and convert to an individual plan within 31 days. They automatically receive coverage without having to be screened for pre-existing medical conditions, which can boost insurance premium rates.

Nonconversion individual plans at HMSA range in price depending on pre-existing medical conditions and other risk factors.

Kaiser offers a variety of individual plan options with prices based on age and gender. Prices for young adults start as low as $38 per month for a basic plan that covers annual exams, hospitalization and emergency services to about $108 per month for a more comprehensive plan.

Medicare and the state Medicaid program are options for seniors and people with little to no assets.

For free health insurance under Medicaid’s Quest program, a single person can make no more than $12,460 per year, a couple no more than $16,760 and a family no more than $25,360.

Assets can be no more than $2,000 for a single person, $3,000 for household of two and $250 for each additional family member.

Medicaid has other programs offering limited benefits at subsidized rates, as well as more comprehensive programs for seniors and the disabled.

For more information go to www.med-quest.us or call 692-8069.

Medicare offers health insurance for residents 65 years and older, disabled and those in special medical circumstances. Go to www.medicare.gov or call 800-633-4227.

"The last alternative is the most costly: You don’t have any insurance," said Bill Corba, Kaiser’s vice president and chief marketing officer. "The sad thing is so many people take that option, then they have an accident or something happens and they have an even worse financial situation than when they started."