After Peter Giunta of West Chester, Pa., was laid off in December, the small landscaping company where he worked continued paying for his health insurance while his boss decided whether to bring him back should business pick up again. But in March, Giunta was cut off from the company's insurance plan.
This was after Congress passed in February the federal stimulus package, which includes almost $25 billion to help the newly unemployed continue the health insurance they had from their companies.
But many like Giunta were left out.
The federal Consolidated Omnibus Budget Reconciliation Act, better known as COBRA, was enacted in 1986 to give most laid-off workers and their families the option of temporarily continuing their health coverage at group rates if they paid the full premiums, which are costly. The stimulus package includes money to reimburse companies 65 percent of those premiums in the form of tax credits to lower the cost for workers. About 7 million people are expected to keep their insurance with help from the COBRA subsidy, according to a Congressional committee.
What Giunta learned, however, when he called his insurance company to get COBRA, was that the federal act regulated only those companies with at least 20 employees. States have to pass laws to offer the insurance extension to small businesses as well. So far, Pennsylvania has not, though legislation is under consideration.
"I'm a middle-class guy who fell through the cracks," Giunta said. "I'm trying to survive."
COBRA's high premiums have long been a deterrent for some. A January report by Families USA, a health care advocacy group, found that the national average for COBRA monthly premiums was $388 for a single person and $1,069 for a family. Giunta said that even if he had been offered COBRA, he would have rejected it without the federal help.
Since the stimulus passed, 17 states and the District of Columbia have changed their laws to help their small business workers qualify for federal help paying for COBRA. A total of 39 states now have laws, known as "mini-COBRA" laws, that allow those recently unemployed from small businesses to qualify for COBRA coverage.
Another six states are still considering bills to expand COBRA coverage. Pennsylvania is the only one considering enacting a new mini-COBRA law; the other five states already allow COBRA for small business employees, but have bills to extend how long they get it, or to help them qualify for federal help paying for the care.
"People were just losing coverage right and left as they were losing their jobs; this is a source that will at least stop a little bit of the bleeding," said Cheryl Parcham, Families USA's deputy director of health policy.
Pennsylvania's bill will likely pass in upcoming weeks, proponents say. "The stimulus package coming up with the tax credit of 65 percent made for a win-win situation for all parties concerned," said Rep. Robert Matzie (D), who sponsored the House bill.
Mini-COBRA laws differ from state to state. In Maine, for example, only workers at small businesses who are temporarily laid off or injured on the job qualify for coverage under mini-COBRA. And while the majority of states allow coverage for at least nine months - the length of time the stimulus will help workers with payments - others limit coverage anywhere from one month to six months.
In response to the stimulus, five states extended their period of coverage to nine months, and Texas and Vermont have bills that would do so as well. Oklahoma also has a bill to extend its period of coverage to four months, up from one. The bill was sent to the governor Tuesday (5/12).
Even if a state allows mini-COBRA coverage, it doesn't mean workers laid off from small companies before February can sign up for coverage retroactively. While the stimulus allows former employees of large companies who declined COBRA coverage before February to retroactively apply for coverage and receive federal help paying the premium, states have to pass laws to allow similar action for former employees of small companies. So far, 16 states have done so, and three states, Colorado, North Carolina and Texas, have pending bills.
"Now more than ever, it's imperative that the state does its part in making sure North Carolinians are getting as many of the benefits found in the federal stimulus package as possible," said state Insurance Commissioner Wayne Goodwin in a statement announcing his support for his state's bill.
Although Pennsylvania could soon pass the newest mini-COBRA law, the current bill doesn't have a provision to allow retroactive enrollment. People in Peter Giunta's position will still find themselves out of luck.
"That doesn't make sense," Giunta said. "Why would they leave a chunk of people out?"