Stimulus bill - COBRA extensions + subsidies

[Stevewc]

COBRA is so expensive for people that extending it without a subsidy will not be very helpful. My COBRA for a family of two is now nearly $1200 a month.

Wouldn't this help in someways though?
You are right in that cobra is expensive but at least a person can get the coverage without being kicked out for past health problems. I also hope and think a retiree might not get as many monthly cost increases. Since the rates would be tied to the employers plan and not an individuals. I'm being told my state related AHIP plan would cost as much or maybe more than what you quote here and the odds of the rate being increased yearly are high.
Steve

 

[Martha]

It will help a small subset of people who are well enough off to pay 1200 a month. For us, we are fortunate to live in Minnesota so our risk pool will cost less than COBRA.

 

[youbet]

It will help a small subset of people who are well enough off to pay 1200 a month. For us, we are fortunate to live in Minnesota so our risk pool will cost less than COBRA.

Is it a required that you exhaust your COBRA coverage before you can move to the state risk pool there?

 

[ziggy29]

Is it a required that you exhaust your COBRA coverage before you can move to the state risk pool there?

I believe under current law (Kennedy-Kassebaum), pretty much all state risk pools require exhausting COBRA. But I think we were talking about the proposed legislation which would effectively allow qualified people to keep COBRA indefinitely until they reach Medicare eligibility. In such a case you couldn't exhaust COBRA... and would that effectively change some of the state risk pools such that anyone who was eligible for COBRA until age 65 would never have the state risk pool as an option?

 

[unclemick]

COBRA is so expensive for people that extending it without a subsidy will not be very helpful. My COBRA for a family of two is now nearly $1200 a month.

1993, $720/mo for one(age49), layed off after 23 yrs - I told them where to stick their COBRA, I needed the 720 to live on.

12 yrs no insurance, an American passport, and a seriously bad attitude toward medical practices here.

Interestingly post Katrina - the rates in Kansas were much better than Louisiana - and I was 12 years older(63).

Go figure.

heh heh heh - BTW don't do what I did.

 

[FIRE'd@51]

Wouldn't this help in someways though?
You are right in that cobra is expensive but at least a person can get the coverage without being kicked out for past health problems. I also hope and think a retiree might not get as many monthly cost increases. Since the rates would be tied to the employers plan and not an individuals. I'm being told my state related AHIP plan would cost as much or maybe more than what you quote here and the odds of the rate being increased yearly are high.
Steve

I think you are largely correct, although I don't know of any individual health insurers that raise premiums on a monthly basis - typically it's yearly, but for some it may be more often (e.g. every 8 months). Individual coverage equivalent to COBRA will be more expensive. The advantage to an individual policy IF you can qualify for one, is that you will have more choices in terms of deductibles, copays, etc. If you are relatively healthy, you can save a lot in premiums by purchasing a policy with a high deductible. After all, it's the catastrophic coverage you really need. Virtually all ER's can afford to pay for the occasional trip to the doctor.

Risk pools or their equivalents tend to be very expensive (unless they are heavily subsidized by the state) since they cover those who can't qualify for individual insurance.

 

[Stevewc]

In such a case you couldn't exhaust COBRA... and would that effectively change some of the state risk pools such that anyone who was eligible for COBRA until age 65 would never have the state risk pool as an option?

I'm like ziggy, I too wonder how this may change the cobra rules. The new legislation may strictly apply to people laid off or fired from their job. It may not help someone who voluntarily leaves their job, but I sure hope it does. At least it would give me more choices. I'll be 55 years old next month and I currently have way over the number of years on the job to qualify for the new plan as I understand it today. I ran the numbers on my state plan "AHIP", if I go with the highest deductible I could save a little money but not much. My state (Alabama) doesn't help out much at all compared to others, I've noticed. Looks like I'll still have a kid in college at my planned retirement date and it may be best for me to keep the better coverage like I now have with my employer. Anyway, insurance is my biggest obstacle for my early out/FIRE. Sure hope something in this mess somehow brings a big smile to my face. I plan to retire at the end of this year (DEC. 2009), been planning and waiting for 2009 for many many years now. PLEASE PLEASE work something out that helps me FIRE away !!!
Can you folks see the fire works and celebration I'm seeing in my imagination as I walk out the gate/door for the last time
I'm sure some of you can cause you've been there and done that and probably have the T-Shirt.

 

[Stevewc]

The subsidy covers 65% of the cost for 9-12 months. The employer pays the 65%, then recovers it as a credit when submitting withheld taxes.

The extension is available to workers over 55 OR who have 10 years with the employer, and lasts until age 65.

I noticed on one of the ticker tape things running on all the news channels that the plan that is to be voted on at the present time has lower the subsidy to 50% to get enough votes to pass it. I guess we have to stay tuned as this thing goes through its changes.
Steve

 

[Stevewc]

Just ran across some info on the cobra extension:
Here's a small piece of it and a link. You can tell the part I like best but looks like it might be an up hill battle.
Steve
http://www.millerchevalier.com/file...7d1dc/Health Policy Alert February 5 2009.pdf

COBRA Extension
The second COBRA provision is much
more troubling for employers. It would
allow any employee (who terminates
employment for any reason) who is either
age 55 or has 10 years of service to remain
on COBRA until age 65. This means that
an employee who is age 55 and has worked
for one month, or an employee who is age​

35 and has 10 years of service, could

remain on COBRA until age 65. Because
the majority of COBRA beneficiaries incur
claims that exceed their premium
contributions, the cost to employers of
such a provision could be significant.
The extension is currently included in the
House bill but not the Senate bill. We
understand that Senators Baucus (D-MT)
and Grassley (R-IA), the Chairman and
Ranking Member of the Senate Finance
Committee, both feel strongly that it
should not be included because it is not a
short-term stimulus provision. They think
it should be debated as part of the
comprehensive health reform discussion
that is expected to begin sometime this​

year.

 

[A Visitor]

As far as I can tell, the Senate deal lowers the subsidy to 50% but also lengthens it to 12 months. The Senate version doesn't include the extension provisions passed by the House. So it will just depend how the two are reconciled for final passage.

Since the COBRA extension involves no govt spending, I will be surprised if it is not in the final bill (along with all the reductions "won" by the 3 Senate republicans in the latest "compromise" since once it goes to reconciliation their votes are no longer needed).

 

[FIRE'd@51]

Since the COBRA extension involves no govt spending, I will be surprised if it is not in the final bill (along with all the reductions "won" by the 3 Senate republicans in the latest "compromise" since once it goes to reconciliation their votes are no longer needed).

Are you saying that the Senate can't filibuster a reconciled bill?

 

[A Visitor]

Are you saying that the Senate can't filibuster a reconciled bill?

It's my understanding that the reconciled bill is just a majority vote but I could be wrong...

 

[Stevewc]

The Senate just passed the bill.
Now if we can make it through the committee thinky, the next step. It will be in, I think.
This committee smooths out the differences between the House & Senate packages they each voted on.
Steve

 

[FIRE'd@51]

The Senate just passed the bill.
Now if we can make it through the committee thinky, the next step. It will be in, I think.
This committee smooths out the differences between the House & Senate packages they each voted on.
Steve

I guess I'm wondering who the "we" is, you seem to be cheerleading for.

I think helping folks temporarily unemployed pay their COBRA and continue their health insurance rather than drop it is good social policy and is beneficial to society in general. This is in the Senate plan.

However, I really don't see why a stimulus package should contain items to help folks retire early. Allowing RE folks to remain on COBRA until Medicare will likely raise the cost of these health plans for workers and the employers who provide them. IMO, this is part of the larger healthcare reform question, which as youbet pointed out in post #23, should also incorporate those who don't have access to COBRA.

 

[ziggy29]

I guess I'm wondering who the "we" is, you seem to be cheerleading for.

I think helping folks temporarily unemployed pay their COBRA and continue their health insurance rather than drop it is good social policy and is beneficial to society in general. This is in the Senate plan.

However, I really don't see why a stimulus package should contain items to help folks retire early. Allowing RE folks to remain on COBRA until Medicare will likely raise the cost of these health plans for workers and the employers who provide them. IMO, this is part of the larger healthcare reform question, which as youbet pointed out in post #23, should also incorporate those who don't have access to COBRA.

Agreed. This is going beyond the scope of just "getting people back to work" in the here and now, which is as much a crisis of consumer confidence as anything. Spending money doesn't do any good unless it encourages hypersavers to stop building their "financial bomb shelters" and start making a few discretionary purchases now and then.

I don't think extending COBRA for decades (and ensuring adverse selection for the employer group plans) does anything to create jobs, save existing jobs or convince people who have the money to spend that it's safer to do so because their job isn't in danger any more. In the end, that last piece is what needs to happen. No matter how much money you throw at this, as long as people continue to fear job loss nothing will change.

And the Dow is down 350 yet again.

 

[oliverdickens]

So how do you guys see this situation and the possible new laws.

I started getting COBRA last April and I was 55. COBRA will run out this October.

Wondering if there is any benefit in the situation for COBRA extension or otherwise with this new spending/stimulus bill

Thanks

 

[Stevewc]

The way I see it, I will be paying for my insurance like I have always done. There is no subsidy in the part of the bill I'm interested in. The cobra thing will just be another option for me. I'm also thinking/hoping that the insurance companies will become more competitive and try to pull my business toward them and away from cobra. I don't pretend to know or understand everything about the effects of this but hope good things and opportunities come from it. I've been paying for insurance all my working career. I'm working on year number 30 at my current job. We, my family have been very healthy and not used it very much at all. So in my mind, now that I'm getting older "Mr insurance company" and I actually might need to use you some day, don't throw me out.

I admit I'm one sided about this, but not looking for a freebie. If I were I would be trying to fake a disability or some junk like that. I just don't want to loose everything I've worked for, to some unforeseen hospital bill down the road. So I plan to cover my self anyway I can. It just so happens this is the latest thing to pop on the scene. Would I not be stupid if I didn't take advantage of perks that just happen to come my way? I've never voted for anybody involved in this to my knowledge, but I will take the crumbs from the table .
I really do hope this doesn't bother you folks to much,
Steve

 

[Stevewc]

So how do you guys see this situation and the possible new laws.

I started getting COBRA last April and I was 55. COBRA will run out this October.

Wondering if there is any benefit in the situation for COBRA extension or otherwise with this new spending/stimulus bill

Thanks

I'm not sure how this thing will pan out but I would guess you have a pretty good shot at it, if they pass this thing on through.
Steve

 

[A Visitor]

Correction

It's my understanding that the reconciled bill is just a majority vote but I could be wrong...

I just read a piece on CNN/Money that indicates the reconciled bill IS "filibuster-able", and therefore the final bill will resemble the Senate version more to retain the 3 Republican votes. The Senate version has the COBRA subsidy but not the extension. I still think, though, that since the extension doesn't represent additional govt. spending it may get in in some form, maybe for over 55 AND some number of years with the employer.

One ridiculous thing about the House bill is that an over-55 retiree could take a job, quit after a week or two, and stay on COBRA indefinitely...

 

[ziggy29]

One ridiculous thing about the House bill is that an over-55 retiree could take a job, quit after a week or two, and stay on COBRA indefinitely...

Thus making it even harder for someone 55+ to find a job?

Sometimes I think Congress has never studied the Law of Unintended Consequences.

Seriously, though, doesn't the COBRA extensions in the House bill (and the subsidies in both bills) only apply to those who were laid off (i.e. involuntarily terminated without cause)?

 

[A Visitor]

You must be laid off for the subsidy in both bills, but the extension in the House bill is for anyone eligible for COBRA under existing law...

 

[Stevewc]

I just ran across this paper about the extension. This may be closer to what actually happens and does increase the cost for those over 55.
Steve

COBRA Bill Summary

 

[ziggy29]

I just ran across this paper about the extension. This may be closer to what actually happens and does increase the cost for those over 55.

So basically, instead of being able to charge 102%, employers would be able to charge this group 125%.

Wasn't there also a provision for folks under 55 with at least 10 years of service in the House bill? I don't see that here. Not that I'd expect that to survive conference committee, but still...

 

[Stevewc]

I do remember reading about the 10 year thing but not in this paper as you stated.
If they do go with the 125% rule that would put me back at the state sponsored AHIP rate so probably wouldn't help me much, but it could be a better health plan.
Just have to see where the chips fall I guess,
Steve

Now that I found where this stuff is coming from I see another paper at his web site:
http://www.house.gov/stark/news/111th/floorstatements/2009/20090128-stimulus.htm

In addition, this bill recognizes the special difficulties facing older and long time workers in a recession. It provides the ability for these workers to extend COBRA coverage beyond the standard 18 months until such time as they have obtained new group coverage or have become eligible for Medicare. This provision has no cost to the government, but will provide what could be the only opportunity for longtime workers to maintain their health coverage.

 

[A Visitor]

Steve, I think Pete Stark introduced that COBRA extension act years ago - the stimulus provisions are similar but don't have the 125% provision. COBRA has gotten so expensive that extension at 125% would be pretty worthless...