Job loss: Stimulus package includes health insurance subsidy

If you are among the 1.5 million Americans who have lost their job since September 2008 and are paying to extend your company-sponsored health insurance under a law called COBRA, studies confirm what you already know: The payments are killing you. In 41 states, according to a recent survey by Families USA, average COBRA payments amounted to more than three-quarters of those states' average unemployment benefits.

But according to the fine print of the stimulus bill being hammered out between the U.S. Senate and House of Representatives, help is on the way -- for those who elected and are paying for health insurance under COBRA, and for many of those who took a look at the prospective price tag and said "no thanks."

The two bills differ in how generously they will help the unemployed with their COBRA insurance payments. But the House and Senate bills contain COBRA subsidy packages, and the provision hasn't been controversial. So it's considered a good bet to be part of the final package adopted by Congress this week.

Here are the details, provided by human resources consultants of the New York-based Sibson Consultants:

-- If you were or are laid off between September 2008 and December 31, 2009, the stimulus bill provisions on COBRA subsidies would apply to you.

-- The stimulus program would subsidize your COBRA payment (the House version would pay 65% of it, the Senate version would pay 50%) by giving the organization to which you pay your COBRA bill (typically your former employer) a tax credit. You would first have to pay your share of the monthly payment, then the stimulus package would kick in its subsidy payment (which is really a credit).

-- If you lost your job within the designated period and did NOT elect to continue your health insurance under COBRA, your employer must offer you the opportunity to sign up for extension of COBRA coverage as soon as the bill becomes law. For those who maintained their insurance under COBRA, the federal subsidies are not retroactive -- meaning, you won't get any reimbursements for the cost of COBRA payments you've already made. Whether you sign on once the bill becomes law, or have stayed insured under COBRA continuously since you lost your job, the subsidy begins when the bill becomes law.

-- Eligibility for the subsidy is a maximum of 12 months, and you lose eligibility for it once you become eligible for coverage under another group health plan -- other than health flexible spending accounts. (COBRA benefits must be provided for 18 months by companies who lay off workers, and the bill paid by the laid-off worker -- pre-subsidy -- is the equivalent of 100% of the cost of coverage, plus 2%.)

-- If you lose your job between the time the bill becomes law and 2010, and you haven't exhausted your 12-months of subsidy coverage yet, you'll be eligible for the subsidy.

Want to check the fine print? See the Library of Congress' posting of the House bill known as HR 1, including congressional actions -- the Senate's passage today among them --that have amended it. Care to weigh in with your representative or senator on the matter? Try here and here, respectively.

-- Melissa Healy

http://thomas.loc.gov/cgi-bin/query/z?c111:H.R.1:

Comments

[A. L. Plaswirth]

WHY SEPT. 1 ? MY LUNG CANCER CAUSED ME TO LOOSE MY JOB AUGUST 25, 2008. AFTER 6 MONTHS OF COBRA PAYMENTS OF $675, THE INSURANCE COMPANY HAS RAISED THE PAYMENTS BY $330, PER MONTH, EFFECTIVE, APRIL 1, 2009. WHO CAN YOU TALK TO?

[Dee]

My lay off date is June 23, 2008. I have been paying cobra since then and have not been able to find a job. I am single and 54. I have depleted my savings paying for cobra and am upset that I will probably be without insurance soon because I cannot afford it any longer and do not fall into the unrealistic time frame of Sept 1, 2008 thru December 1, 2009. What happens to us?

[debbie]

Hi I have been reading some of the coments on the cobra and some have said this is just about like welfare. Well I want to say that I can't afford this welfare because, we were laid off without warning and one day they just say good bye. Not even a thank you. My husband has alot of heart problems that are severe and I have health issues of my own. How can anyone make it on unemployement then take out $880 a month plus try to buy medications and keep the household bills going and buy food???? It just can't be done. Then on top of that be told you make to much money on unemployment for your husband to recieve SSI OH BOY is that a slap in the face.

[Leanne Hutchings]

It is completely unfair that people laid off prior to the Sept. 1, 2008 eligibility date have to use up what little savings they have to pay for COBRA. The LA Times should run an article about those left behind by their governments aid packages.
Has anyone mentioned that premiums are again rising? I was just informed that my COBRA is going up another $200 per month. How are we to pay $1000 a month for family coverage while collecting unemployment?

[Sharon Head]

If the company closes, who pays the stimulus health care? I was employed 34 plus years and the comnpany closed. I am 61 years old and pay $750.00 a month for insurance.

[LC]

I am a 29 y/o single mom having earned about $18k for '08. I worked as a high-level admin asst (with 5 yrs. experience and having completed 1 yr. of community college, a couple paraprofessional college level classes, and 1-1/2 of regular professional development cIasses) I was laid off through no fault of my own in early May '08, losing my employer-paid health insurance. I was rehired by the same employer several weeks later in June '08 but into a non-benefits position. I elected Cobra health coverage for a month ($700) and dental for 3 months ($236) for my son and I but couldn't afford to continue it. I was then laid off again in November '08. I would love to make use of the "special enrollment opportunity' & 50-65% subsidy for CObra premiums. Although I was laid off due to economic reasons during the specified time frame, my Cobra eligibility came from a position that i was laid off from in the much earlier month of May '08. I have applied for healthy families and medi-cal multiple times and am either not eligible for one reason or another or face a huge $700 share-of-cost/deductible. My unemployment benefits have run out and I need to be looking into an extension. I pay out of pocket psychologist bills on a regular basis for my child. We live a very modest lifestyle and I'm not drowning in debt at all - I just can't afford health/dental coverage and living expenses. Any suggestions?

[Shelby L Webb]

I lost my job at Dana Corp in Sept 2007. Not thru fault of my own but the plant was moved to Mexico. My husband and I have been on Cobra since that time, but now have been informed that our
cobra has expired and the stimulus package has not helped us. I am 63 and my husband is 64 and we can't find affordable insurance, so what are we suppose to do?

[Susan]

I have been covered by COBRA since I lost my job in 4-2008. I was making the premium payments for the first 5 months. Then I called the local COBRA office. I told them I could not afford to pay it anymore, and I was going to have to put myself and my family on medical assistance. They told me they could pay my premium. So since then they have been. I received a letter today stating they were dis-enrolling me from the program, as it is not cost effective. I understand my COBRA may be ending, but what should I do?
I am concerned because I had surgery last year that is not complete. I still have another operation to go through. I have until 9-2009 to make a payment on my own, or apply for med assistance.
Please any help would be great.
TY

[Sissy]

Please, I need some advice....I paid my own insurance through my company which i have been with for about 7 years now, since then I was fired last week and when I went to inquire about cobra, they said my employer cancelled the group insurance with the company...since he is on his wifes plan but he didnt cancel until a week after he fired me...can i still qualify for cobra...doesnt seem fair to me....the company still had insurance when i was fired..

[Robert Fredson]

Or, instead of living off of the government, you could get off your lazy duff and just go get a job with health care. If you can't--well, maybe you need to work harder at it. If you have a family--well, maybe you needed to think about that before you asked the taxpayers to support your offspring.

[Maria]

My husband lost his job after 22 years in January of 2008. We had to pay our COBRA in full at 1240.00 per month, so unemployment was NO help for the bills and food. He was able to find a job for 3 months in Nov of 2008 but then the bottom fell out of the economy and back on unemployment again. This time with the government assistant to COBRA that has helped grately. But it will end in 2 months then our preimum will go to 850.00 per month, so there goes unemployment dollars helping with bills and food again. Since they have passed the unemployemnt extention does anyone know if they are going to do the same with COBRA?

[JOHN]

Hi,
PLEASE HELP.....
This article says "You would first have to pay your share of the monthly payment, then the stimulus package would kick in its subsidy payment (which is really a credit)."
1) Does it mean the employee first pay the entire 100% premium (Ex. $600) for COBRA, then later the federal govt. reimburse the employee 65% premium ($390)?
OR
2) Does the employee pay the 35% ($210) and employer pays 65% ($390), later employer gets reimbursed?
OR
3) Does the employee pays the 35% ($210) and that is it?
PLEASE ADVISE......

[JOHN]

Hi,

I got the answer for my previous post. The answer is "the employer must first provide this 65% payment toward the COBRA premium and then be reimbursed by the government."

Can someone explain how and when employer can reimburse the 65% premium he paid for his employees?

Thanks for any input.