Laid-off Workers Would Get Health Insurance Subsidies Under Democrats' New Coronavirus Stimulus Plan

House Democrats have a new proposal that aims to offer health insurance assistance to workers who have been laid off, furloughed or had their hours slashed due to the coronavirus pandemic.

The plan would cover 100 percent, for up to 15 months, the extra cost associated with health insurance premiums that would otherwise be covered by an employer. If a jobless worker chooses to remain on their employment plan under the Consolidated Omnibus Budget Reconciliation Act, or COBRA, the federal government would pick up where the employer left off and subsidize the insurance, ensuring that coverage costs would not increase.

Democrats said by offering workers the opportunity and affordability to remain on their employer-based plan, despite perhaps being out of work, the employees could avoid coverage gaps or avoid being forced to change plans or providers amid a pandemic.

"In the midst of a public health crisis, it is critical that workers and their families maintain access to affordable health care," Education and Labor Committee Chairman Bobby Scott (D-Va.) said in a statement. He and two of his Democratic colleagues—Steven Horsford of Nevada and Debbie Dingell of Michigan—pushing for the legislation have dubbed it the "Worker Health Coverage Protection Act." It "would provide immediate relief to workers and families by making sure they do not lose their health insurance in the middle of a pandemic," Scott added.

Democrats laid-off workers health insurance
Rep. Bobby Scott (D-VA) speaks during a news conference discussing the College Affordability Act on October 15, 2019, in Washington, D.C. Photo by Zach Gibson/Getty

Last week, the number of jobless claims and people seeking unemployment benefits skyrocketed to nearly 17 million over the course of a three-week period amid warnings from economists that the American economy is headed toward Depression-era level unemployment.

The proposed subsidies for COBRA health coverage, which were first reported by Vox, is a similar idea that was implemented during the Great Recession in 2009. For laid-off workers, the expense to continue their existing insurance could increase exponentially.

"Employers typically subsidize anywhere from 50 to 80 percent of the coverage's cost," Jennifer Berman told Newsweek. She's an employee benefits attorney who's CEO of MZQ Consulting and senior vice president of compliance for Kelly Benefit Strategies.

Typically, employers choose not to continue subsidizing a person's health insurance whom they've laid off, forcing the employee to pay the full cost of their plan or to transition to the individual marketplace.

Amid the coronavirus, however, Berman said some employers are furloughing workers while continuing to pay their health insurance benefits. But as social distancing measures drag on and much of the country's economy remains shuttered, fewer businesses will be able to continue the practice. And if a company goes out of business entirely, there's no COBRA option because the business and employment-plan no longer exist.

"The point is that this is an extraordinarily complex system, and how that interacts with the exchanges and uninsured benefits offered makes it really hard for individuals," Berman said.

Under the Democratic proposal, workers who have been terminated, furloughed or seen their hours cut from March 1 through six months after the public health emergency would qualify for the COBRA benefits assistance.

The idea is intended for the next stimulus package, which won't be drafted—much less passed—anytime soon. Still, lawmakers and the Trump administration, including the president, have signaled a willingness for another large relief measure, one that could potentially include another round of individual checks.

Congress will remain out of session until at least May 4, making the process of negotiating and drafting legislation all the more difficult. Republicans and Democrats also remain in the midst of a stalemate with dueling proposals on how to replenish funds for small business loans that are expected to run dry by the end of the week.