Under Obamacare, Americans who get laid off from their jobs will have more options for getting affordable insurance coverage while they’re unemployed. It’s just one of several ways that the health reform law will allow people to have slightly more job flexibility without worrying about losing access to their health care.
The majority of Americans access health insurance through their employers. If they lose their job, they lose that health care — unless they opt to continue it through the Consolidated Omnibus Reconciliation Act (COBRA). But paying for COBRA can be prohibitively expensive.
Under an employer-sponsored plan, workers are only responsible for part of their monthly insurance premiums, and their employer picks up the rest. Under COBRA, however, terminated workers typically must cover the entire cost of the premium to continue their plan. Thanks largely in part to rising health costs, paying for those high COBRA premiums eats up most of Americans’ unemployment benefits. It can also be a complicated bureaucratic maze to navigate, sometimes involving multiple benefits administrators and allowing people to fall through the cracks. And COBRA benefits only last for 18 months.
But when Obamacare’s state-level insurance marketplaces open to the public next month, those unemployed Americans will gain another option. Consumer advocates say that enrolling in an Obamacare plan will probably be cheaper than paying for COBRA. That’s because the health law extends federal subsidies to people making up to 400 percent of the federal poverty line. Most Americans purchasing plans on the marketplaces will qualify for that assistance to make their plans cheaper.
“COBRA was a transitional type of coverage while you’re between jobs, but now we have a subsidized form of coverage available, exchange plans with subsidies,” Edwin Park, the vice president for health policy at the Center on Budget and Policy Priorities, told NPR.
Health care advocates are hoping that Americans learn more about their options under Obamacare so they’ll be prepared in the event of a job loss. If they’re not aware they can enroll in the marketplaces, and get locked into a COBRA plan instead, they’ll be stuck until the next annual open enrollment period. And they’ll likely be paying dramatically more for their coverage. According to the Kaiser Family Foundation, the average monthly premium for an employer-sponsored health plan is $490 — and under COBRA, terminated workers will be responsible for paying for all of that. In the Obamacare marketplaces, on the other hand, millions of Americans who qualify for subsidies will be able to pay less than $100 each month for their insurance plans.
The uneven nature of the sluggish economic recovery has resulted in a huge employment gap between rich and poor Americans. As lower-income Americans struggle to find work, being able to save money on health care could go a long way toward preventing them from falling deeper into poverty.
Even when Americans don’t get laid off, and simply want to switch jobs, the Obamacare marketplaces could afford them more flexibility to do so. Studies have shown that people who get health insurance through work are less likely to switch jobs, partly because they may be worried about losing their coverage — but under the health reform law, that won’t be as much as a concern. And a recent report from the Urban Institute also predicts that Obamacare’s new coverage options will make it easier for Americans start their own businesses, since self-employed people will gain better options on the individual market.