Unemployed Americans struggle to get free health insurance in pandemic

Paige Santillo worries about not being able to pay for her medication without health insurance.

Source: Paige Santillo

The help from the government seemed to come just in time for Paige Santillo.

Due to the pandemic, Santillo had been laid off from her job as a marketing manager at the publishing company Informa in October. As part of her severance package, the company paid her COBRA health insurance premiums through April. Come May, she’d be on her own with the $700 bill.

She didn’t know if she could afford that tab and, without coverage, she feared having to stop taking her medication for anxiety and depression. But then the American Rescue Plan passed in March, and the $1.9 trillion stimulus package included a provision that offered many unemployed workers free health insurance coverage through COBRA for six months, starting April 1.

Yet when Santillo called WageWorks, the company that handles COBRA coverage for Informa, in the middle of April, to enroll in the free coverage, she was told that the subsidy wasn’t available yet. And her May premium was still due.

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“They said they’re waiting for more guidance from the Department of Labor,” Santillo, 28, said. “I don’t know what to do.

“I’m on medication,” she added. “If I stopped taking it, it would destroy all the progress I’ve made.”

WageWorks did not respond to a request for comment.

CNBC has heard from around a dozen other people, who, like Santillo, have tried and failed to access the government’s promise of six months of free health insurance coverage through COBRA.

COBRA, or the Consolidated Omnibus Budget Reconciliation Act, offers people who leave a company the option to remain on their workplace insurance plan, but it’s usually prohibitively expensive because it requires an individual to cover the usual share of their monthly premium, plus the part their former employer was paying. The typical annual premium for job-based coverage in 2020 was $7,470 for individuals and $21,342 for families, according to the Kaiser Family Foundation.

Yet now that the coverage is free through September for those who involuntarily left their jobs, there’s likely a huge demand for it, health experts say.

More than 16 million people lost their employer-sponsored health insurance during the pandemic, according to one estimate.

But it’s unclear how much success people are having trying to access the relief.

The people who contacted CNBC said their former employers and insurers gave them confusing information and were uncertain about when they’d be able to start offering the free coverage, leaving some feeling like they’d need to pay the pricey premiums themselves or risk losing health care.

Recently, the Labor Department issued a form that people can submit to their employer, requesting the subsidy.

However, when Santillo tried submitting the document to Informa and was referred on to WageWorks, the latter told her it was still waiting on guidance from the Labor Department.

“Everyone is pointing fingers,” Santillo said.

Informa did not respond to a request for comment.

Caitlin Donovan, a spokeswoman for the Patient Advocate Foundation, has also heard from people running into trouble trying to access the six months of subsidized insurance.

“The process hasn’t been particularly patient-friendly,” she said.

The stress of losing my job of 16 years in a pandemic was bad, but not knowing when I can afford to go to the doctor is worse.

She suspects employers may be a little skittish about offering it. While the IRS is supposed to refund the costs to companies in the form of a tax credit, the agency has yet to issue any guidance on how that process will work.

“Unfortunately, a lot of the legislative language relating to Covid subsidies has been ambiguous and confusing,” Donovan said. “Even the savviest employer may be cautious about signing people up for plans under these conditions.”

Grant Vaught, a spokesman for the Department of Labor, which is administering the COBRA subsidy, said that plans should not collect premium payments from eligible individuals during the relief period. And he said that anyone who feels they’ve been wrongly denied the assistance should contact a benefits advisor at the Department of Labor through their website or by calling 1-866-444-3272. (Many unemployed workers are also eligible for a free health insurance plan on the Affordable Care Act’s marketplace.)

He said the department has issued guidance about the free coverage and encourages all employers to notify people of their eligibility as soon as possible, although they don’t legally have to do so until the end of May. That’s another concern for health-care advocates.

“It’s available for such a short period of time, and you don’t even learn about it until May 31?” said Sabrina Corlette, co-director of the Center on Health Insurance Reforms at Georgetown University’s McCourt School of Public Policy.

“A lot of people may miss out on the opportunity.”

Knowing about the relief wasn’t a problem for Peter Dorton. Accessing it was.

He can’t afford his $850 monthly COBRA premium without the government’s promised subsidy. In March 2020, Dorton, who is 53, was furloughed from his job as a waiter at The View at the Marriott Marquis, where he’d worked for nearly two decades. He was eventually laid off.

Marriott paid his health insurance premiums for a year, but he was going to be on his own with the bill come April. The government’s relief came just in time, or so he hoped.

Peter Dorton is afraid to visit his cardiologist until he knows he’s covered by COBRA.

Source: Pete Dalton

When Dorton called the human resources department at Marriott on April 16, he explained that he was now entitled to free COBRA coverage through September.

The representative had other news for him. 

“We don’t have a timeframe as to when they’re going to decide on what they’re going to do with the rescue plan,” she told him, more than a month after the package became law, according to a recording Dorton shared with CNBC.

“All we were told is they were reviewing the legislation,” she said.

In the meantime, she said, certain treatments may not be covered because he hasn’t made a COBRA payment himself.

As a result, Dorton hasn’t visited his cardiologist, even though he has a pacemaker and is supposed to get regular check-ups.

“The stress of losing my job of 16 years in a pandemic was bad, but not knowing when I can afford to go to the doctor is worse,” he said.

Julie Rollend, director of public relations for Marriott, said the company was working diligently to make sure that free COBRA coverage is available to all eligible former employees from April through September.

“Marriott anticipates that it will issue all required notices well before the law’s May 31 deadline,” Rollend said.

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