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    Relief for the COBRA bite

    Bob Balaban  April 10 2009 03:45:57 PM
    Greetings, Geeks!

    I got some VERY good news yesterday, and for those of you in the U.S. who are on COBRA health plans, it may apply to you as well, so I thought I'd share (Non-U.S.ians or those who are on employer-sponsored health plans probably won't care, go do something useful.)

    As you may have read in these pages, I got laid off from my job back in January. Given that unemployment meant that my previously employer-sponsored health insurance was terminated, I needed to do something. So I converted the previous plan to a "COBRA" plan. That means that I was able to continue the health insurance coverage for me and for my family by paying the full amount of the monthly premium. This "conversion" ability is mandated by US Federal law. The idea is that you (the newly unemployed worker) pick up the full cost of the insurance (your former employer pays nothing), but the cost is still calculated at the group rate you were getting before, so (in theory...) the premiums are still lower than they would be if you had to go get your own policy.

    So, that's a nice thing, especially during an economic melt-down, when it's not so easy to get a new job. Unfortunately, health insurance is still incredibly expensive, even at group rates. My monthly bill for a family plan is approximately $1500. Of that, maybe $150 or so is dental coverage, the rest is "normal" health coverage. Naturally, there's still deductibles and co-pays and all the rest, just like before.

    That's a LOT of money to come up with every month when you're unemployed. Luckily, President Obama and the Democratic Congress (I say that not only because the Democratic Party has a majority in both houses of Congress now, but because almost all of the Republicans voted against the bill I'm talking about) added a provision to the recently passed "Stimulus Package" that subsidizes COBRA payments.

    I heard something about this on the radio, and phoned my former employer's benefits department. DO NOT RELY on what I am about to tell you here: go check FOR YOURSELF!!

    Here's a summary of what they told me:

       Eligibility - you can get the subsidy if you were involuntarily terminated from your job, and are currently paying for a COBRA health plan. If you quit, you're not eligible.

       When does it start? - The subsidies are retroactive to March 1, 2009.

       What do I get? - The Government will pay 65% of your COBRA payments, you continue to pay 35%.

       How does it work? -- Your insurance company will be in touch with you later this month. As you can imagine, they are scrambling to catch up with all this. Your payments (supposedly starting in May, assuming they get you the info in time) will be reduced to the new, lower amount. The retroactive amount (the "overpayment" you made for March and April, if any) is applied to future payments.

       How long does the subsidy continue? - I didn't think to ask that, though I'm sure they'll let me know. Anyone else know the answer? Please post it!

    This is a GREAT deal and, if it works out as expected, will save me a lot of money each month.

    Remember - Check with your own COBRA provider to find out exactly how this applies to you, don't rely on what I was told.

    Anyone have more detail or corrections? Please post 'em!

    Personal comment: DAMN I'm GLAD I voted for that guy!!

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    Comments

    1Chris  4/10/2009 5:45:36 PM  Relief for the COBRA bite

    So does that mean you are only responsible for paying $525 per month instead of $1500?

    2Rob McDonagh  4/10/2009 6:02:46 PM  Relief for the COBRA bite

    Awesome. I didn't know that was in there. That's great news for a lot of people.

    3Rob Novak  4/10/2009 8:53:29 PM  Relief for the COBRA bite

    Awesome news Bob. I believe it all except...health insurance companies don't "scramble". :-)

    -Rob

    P.S. The US Department of Labor website with related information on the program is: { Link }

    4Greg  4/10/2009 9:08:06 PM  Relief for the COBRA bite

    This is the only reason we haven't had to put our home up for sale yet.

    5Bob Balaban  4/11/2009 4:43:35 AM  Relief for the COBRA bite

    @1 - Plus or minus, my numbers were not exact.

    @3 - Thanks for the link, Rob. Great (and detailed) info on that site.

    @4 - I'm sorry you're in such deep difficulty, Greg. I hope you pull through.

    6mdmadph  4/13/2009 1:15:14 PM  Relief for the COBRA bite

    Glad to hear you're managing to keep your head above the water!

    Oh, isn't the US healthcare system just swell?