Stimulus bill - COBRA extensions + subsidies

[A Visitor]

Well the final bill is out of conference. I can't find anything yet on the COBRA provisions - it may take a day or two before those details come out...

 

[oliverdickens]

Were does one even look to see what the new provisions will be once signed off on. I am sure I will have to be proactive with my old company should there be any changes in COBRA so appreciate knowing where to look to prepare for the fight.

Thanks

 

[OAG]

When the FINALLY vote, both chambers, maybe Thursday and Friday as it stands now, I would expect the entire bill will be posted on the Internet and then, and assuming the President signs it (which is, more or less, a foregone conclusion) that will be it. However, like all major (and some minor) legislation the "devil" will be in the implementation by the respective departments of the government, it this case I would assume HHS.

 

[Stevewc]

Were does one even look to see what the new provisions will be once signed off on. I am sure I will have to be proactive with my old company should there be any changes in COBRA so appreciate knowing where to look to prepare for the fight.

Thanks

I think the companies will be legally obligated to notify you if you fall within the guide lines, what ever that will be. I'm pretty sure I read that people laid off from their jobs would be given an extra number days to get on board, passed the original cobra rules. I would definitely stay tuned in and on top of things though. I think companies will be pushed and stressed somewhat trying to implement this, probably will be end of march or later before they get it all figured out.
Later,
Steve

 

[A Visitor]

I have seen several articles that indicate the final bill has the 12 month 50% subsidy for laid-off workers, but so far no indication that the extension survived in any form at all (although no difinite statement that it isn't there either). Looks like we may have to wait for Obama's real universal coverage plan after all...

 

[ziggy29]

I have seen several articles that indicate the final bill has the 12 month 50% subsidy for laid-off workers, but so far no indication that the extension survived in any form at all (although no difinite statement that it isn't there either). Looks like we may have to wait for Obama's real universal coverage plan after all...

I believe they watered it down somewhat in conference in order to make sure that the three GOP senators who supported it continue to do so, because they are needed to make sure it can get to the full Senate for a vote.

 

[Stevewc]

The one and only thing in the bill that might have helped a person retire early is out, the best I can tell? I found this write up on it. Business's and lobbyist beat it out, I suppose.
Steve

Hr News & Views Blog


The earlier House version called for a 65% premium subsidy up to 12 months. It also would have allowed employees with 10 years of service and those 55 and older to retain COBRA until eligible for Medicare, a potentially decades-long entitlement that business groups successfully fought to have it removed.

 

[Stevewc]

There's a possibility the senate want be able to pass it anyway. Looks like Teddy isn't coming back to Washington to vote !!! It will be extremely close for them.
Steve

 

[lets-retire]

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.

When the DW moved from one job to another she had a three month waiting period for insurance and I was unemployed. 1.5 hours after her insurance expired she had a Grand Mal seizure resulting in a large gash in her head (above her eyebrow starting from the inner corner of her eye going across to the outer corner of her eye then 45 degrees up to her hair line) and subsequent issues. We were on the fence about whether we were going to continue COBRA for the two months left of her waiting period. After the bill came from the ER we were no longer on the fence. The bill was well over 7k, the COBRA was less than $1000 per month for a family of three. It was a decent plan that covered a lot. The total cost to us for her brain surgery was $250 IIRC. Total cost of the surgery and the immediate after care was high six figures.

 

[opting out]

Hello all - any thoughts on whether these goodies will be available to voluntary retirees? All the coverage I can find equates COBRA with workers who have "lost their jobs"...

What difference would it make if I am terminated or retire? Either way, there is a potential slot for a new employee. That's a stimulus.

 

[ziggy29]

What difference would it make if I am terminated or retire? Either way, there is a potential slot for a new employee. That's a stimulus.

Perhaps. But I think part of the idea is that if someone has most of their health insurance covered for a few months after a layoff, they may not be quite as fearful about a layoff and they may not feel like they need to build that "financial bomb shelter" as high and as nuke-proof as before.

At least that's one way to look at how the COBRA subsidies, like them or not, could be seen as something to encourage economic activity from people who are still working and had paying for health insurance in unemployment as one of the fears they had to hoard cash for. I know that makes the potential for a layoff a lot easier for me to take. Between that, severance pay and unemployment we could probably go for several months without depleting our savings below where it is today. A big assist goes to a simple lifestyle and a paid-off house.

 

[Stevewc]

What difference would it make if I am terminated or retire? Either way, there is a potential slot for a new employee. That's a stimulus.

From what I have read, the subsidy applies only to people laid off. They can even beat you out of it if you are fired for gross misconduct. In other words fired with cause.
Of course I haven't seen the actual documents.
Steve

 

[FIRE'd@51]

Perhaps. But I think part of the idea is that if someone has most of their health insurance covered for a few months after a layoff, they may not be quite as fearful about a layoff and they may not feel like they need to build that "financial bomb shelter" as high and as nuke-proof as before.

Also, by making COBRA more affordable, I would think one would be more likely to keep it. Once you drop creditable insurance coverage for 61 days, you may have a real problem getting insurance again, and even if you get it, you may be subject to waiting periods for pre-existing conditions.

 

[oliverdickens]

Where does one find a summary of the now law pertaining to the COBRA stipulation? I have tried reading thru the bill, but no luck finding it.

I was separated from my company and started on COBRA in May 08 and it will run out in Oct 09.

Seems I would be able to get the subsidy but heard that you must be laid off within the period of August 08 and Jan 10, which would leave me out.

If that is true, it makes no sense as to helping those still unemployed that were separted prior to August 08.

Any assistance to understanding this better, is appreciated.

Thanks

 

[Martha]

Here is a link that does a good job of summarizing the law:

President Signs Stimulus Bill With Significant COBRA Changes for Employers

From the article:

Subject to income limitations, employees who are terminated “involuntarily” – a term that is not further defined in the Act or the accompanying Conference Report – between September 1, 2008, and December 31, 2009, and their covered dependents, would be eligible for a subsidy of 65 percent of the premiums they would be required to pay for up to nine months for any group health plan in which they participated at the time of termination, excluding health flexible spending accounts (FSAs). These “assistance eligible individuals” would be required to pay only 35 percent of the premium charged under a plan. Employers would not receive any subsidy payment upfront, but would be able to recover the other 65 percent of premiums in the form of a credit against their income tax withholding and FICA taxes (employer and employee portion). If the premiums due an employer exceeded its tax obligations in any given quarter, the U.S. Treasury would issue a check to make up the difference. This tax credit arrangement also applies to insurers and multiemployer plans to whom COBRA premiums are payable.
This subsidy would not apply to employees (or their dependents) who have an adjusted gross income of more than $125,000 ($250,000 for joint filers) in the year in which they would receive a subsidy. If a taxpayer with an income of more than $125,000 ($250,000 for joint filers) receives any COBRA premium assistance, that assistance will be added directly to the taxpayer’s income tax liability in the relevant year (subject to a phase-in for incomes up to $145,000 or $290,000 for joint filers). We would expect future regulations to clarify what would happen to an employer’s tax credits in these cases. These high-income terminated employees have the option under the Act to permanently waive the right to premium assistance.

 

[FIRE'd@51]

Pretty thoughtless on the part of Congress to not provide assistance for those laid off prior to Sep 1, 2008. If those folks haven't found work by now, they most likely need the subsidy even more than those laid off after Sep 1, 2008. IMO, the subsidy should have been for anyone who was laid off and still on COBRA.

 

[oliverdickens]

Thanks for this information, really helpful and sustantiated what I thought. ie I will not be eligilbe since I separated prior to Sept 08.

I agree, once again, congress was shortsided and is hurting many people currently struggling to pay for COBRA but have been laid off prior to Sept 08. Totally shows lack of understanding on our leaders part and being out of touch with those needing it the most.

 

[lets-retire]

Therein lays the problem, where to draw the line. Either someone feels they were left out, or everyone receives the handout. We can always do more until we can't.

 

[ziggy29]

Therein lays the problem, where to draw the line. Either someone feels they were left out, or everyone receives the handout. We can always do more until we can't.

I guess that's part of the reason why they create a lot of these things with "phase-out" stipulations so that it's not an all-or-nothing thing by changing one day or one dollar.

 

[OAG]

Hello all - any thoughts on whether these goodies will be available to voluntary retirees? All the coverage I can find equates COBRA with workers who have "lost their jobs"...

Here is a Washington Post article on 55 yo may be able to purchase Medicare Coverage. Very last paragraph: Obama to Unveil an Ambitious Budget Plan

 

[ziggy29]

Here is a Washington Post article on 55 yo may be able to purchase Medicare Coverage. Very last paragraph: Obama to Unveil an Ambitious Budget Plan

Interesting. Didn't President Clinton float this idea once upon a time -- for people from 55-64 to "buy into" Medicare?

 

[A Visitor]

Any thoughts on what the cost might be to buy into Medicare? The article put the 2007 combined cost of Medicare/Medicaid at $561B for 100M people, or about $5600/person. I would guess 2009 will be at least 10% higher per person. And Medicare coverage alone isn't that great. If the buy-in is in that ballpark I would think it will only be useful to people who can't get other coverage, in turn driving the cost even higher...

 

[OAG]

AT LEAST $96.40 a month and probably a LOT MORE (some magic formula like: years below 65 X the current rate (example: 55 yo so 65-55=10 then 10X$96.40X12 so buy in would be $11,568, in this example) and, of course, current and ongoing monthly payments). Just a WAG and maybe a SWAG, on my part, since, they have not even considered approving it (the Congress).

 

[FIRE'd@51]

Any thoughts on what the cost might be to buy into Medicare?

From the AARP web site:

• Allowing buy-ins for people 55 to 64 Baucus would allow temporary Medicare buy-ins for those in this age group until universal coverage becomes a reality. For over 4 million uninsured Americans ages 55 to 64, the only option now is to buy individual insurance, which is often unaffordable or even unavailable to people with preexisting health conditions.

But a guarantee of full Medicare coverage, regardless of health status, wouldn’t come cheap. Enrollees would have to pay full premiums for Part A (hospital insurance) and Part B (outpatient services), without the subsidies that beneficiaries age 65 and over receive. Those premiums could add up to at least $800 a month.


And this would still leave you with substantial copays, and provide no drug coverage.

 

[OAG]

That is far more expensive than my "guess" would have been. Wonder about the selective application issue and how it would be covered.