Lying Flat Without Health Insurance Is Very Uncomfortable

(Bloomberg Opinion) -- It's one of the most popular pandemic myths: the one about all those millennial Americans who've supposedly hit the pause button in promising careers in a quest for more meaningful lives.

The latest data from the Bureau of Labor Statistics confirms the less romantic reality that my Bloomberg Opinion colleague Justin Fox and others have identified — the record percentage of Americans quitting their jobs is being driven by turnover among low-income workers in certain industries, not by burned out white-collar workers.

Yet the persistence of the myth of what's been called the Great Resignation suggests that it has enduring appeal. Reports from China indicate that the movement dubbed lying flat on Chinese social media might have more sticking power there.

One explanation for the difference could be that in the U.S., health coverage is tied to employment. When a worker leaves her job without another position lined up, she typically has two choices if she wants to continue being insured: elect to maintain coverage from her previous employer for a certain period of time, or purchase a plan through the health insurance marketplace for individuals created by the 2010 Affordable Care Act.

Neither option is enticing, despite significant recent changes, especially for high-income workers, older people or those with medical conditions.

Continuation of health coverage, more commonly known as Cobra, is often expensive. That's because the employer is no longer responsible for contributing to monthly premiums, and there's a service fee — which means individuals wind up paying 102% of the monthly premiums, or four times more than they did when they were employed, on average, according to estimates from the Kaiser Family Foundation.

Covid relief legislation enacted last March provided a subsidy to help with Cobra payments, but the assistance ended Sept. 30.

For those who opt to go through the individual health insurance marketplace run by the government, it's undeniable that things have improved. Because of Obamacare, insurers can no longer deny coverage for pre-existing medical conditions, they have to provide a clearer summary of benefits, and there are limits on expenses like out-of-pocket costs, among other changes.

Still, there's a long way to go, particularly for those accustomed to a health insurance plan provided by a large employer.

For example, the network of providers in an Obamacare plan tends to be much narrower than for employer-based insurance, so those who want to keep seeing the same doctors may have trouble doing so. A 2017 study by economists at the University of Pennsylvania showed that more than 20% of plans in the marketplace excluded 75% of available providers.

Deductibles, or the amount paid before insurance kicks in, can be high. A mid-level plan in the Obamacare marketplace had an average deductible of about $4,800 per person compared to about $1,700 for an employer-based plan. And remember, premiums can be up to three times higher for older participants compared to younger ones.

The Covid relief legislation, known as the American Rescue Act, expanded eligibility for tax credits to offset the cost of insurance purchased through the government exchange. Previously, only those who made 400% or less of the federal poverty level (up to $51,520 for singles, $69,680 for a couple, or $106,000 for a family of four) could qualify for assistance with premiums.

The legislation removed the 400% cap, but only through the end of 2022. President Joe Biden's catch-all spending plan proposed to keep the expanded subsidies in place through the end of 2025, but it remains bogged down in Congress.

Even for those who aren't fazed by some of the less generous terms provided by marketplace insurance, the choices can be overwhelming. There are more than 100 plan choices on average, according to a recent study by the Department of Health and Human Services.

Workers may not feel as handcuffed as they once were to their employer's health insurance plans. But their health insurance options if they're choosing a less conventional path — whether it's to lie flat or become self-employed — are still decidedly less comfortable.

More From Other Writers at Bloomberg Opinion:

• The Great Resignation Is Great for Low-Paid Workers: Justin Fox
• Lie Flat If You Want, But Be Ready to Pay the Price: Allison Schrager
• Biden's Relief Bill Is a Missed Opportunity: Nir Kaissar and Timothy L. O'Brien

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

Alexis Leondis is a Bloomberg Opinion columnist covering personal finance. Previously, she oversaw tax coverage for Bloomberg News.

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