Government now subsidizes health care costs for laid off people

[Maraya1969]

http://www.pbs.org/nbr/blog/2010/01/laid_off_get_government-subsid.html

Laid off? Get Government-Subsidized Health Insurance
posted by Jeff Brown, Personal Finance Blogger at 10:34 AM on 01/07/10

Jeff Brown It stinks to lose a job you'd like to keep, no matter how you look at it. But for lots of people, the worst damage isn't the lost income, as bad as that is, it's a huge medical bill that hits after the former employer's coverage ends.

Maybe this will change someday, but until then laid-off employees have to scramble to plug this enormous hole. Otherwise, one bad illness or accident could wipe out a lifetime's savings. Medical bills are one of the chief causes of bankruptcy.

Fortunately, there is a bit of help - temporary help - in recent revisions of the COBRA rules. For many workers who lose jobs involuntarily, the government will pay 65 percent of the cost of continuing health-care coverage through the former employer for as long as 15 months.

COBRA stands for Consolidated Omnibus Budget Reconciliation Act, a 1985 law giving people the right to continue their employer-provided health coverage for up to 18 months after being terminated. Until last February, the former employee had to shoulder the cost, which was often crushing.

Then Congress passed the American Recovery and Reinvestment Act, providing a 65 percent government subsidy for the worker's cost of keeping coverage, and giving employers a tax credit for the other 35 percent. In December Congress extended the program from the end of 2009 to February 28, 2010. At the same time, it increased the subsidized period to 15 months from nine.

A report by the Henry J. Kaiser Family Foundation says the average family would pay $1,137 a month for coverage without the subsidy, $410 per month with it. The program leaves the average individual paying $144 a month instead of $398.

Sounds great, but of course there are lots of provisos:

* You have to be laid off between Sept. 1, 2008 and Feb. 28, 2010.
* You must have had employer-sponsored insurance before being laid off
* You must have worked for a company with the equivalent of at least 20 full-time workers. (Some states require smaller firms to offer continued coverage with a smaller subsidy. Check your state's policies)
* Your former employer must not have gone out of business or stopped providing a health plan.
* The subsidy phases out for individuals with incomes between $125,000 and $145,000, and for married couples earning $250,000 to $290,000.
* The subsidy ends if you become eligible for Medicare or another group-insurance policy.

COBRA rules require employers to notify employees of their rights within 14 days of a "qualifying event" such as a layoff, and the employee has until 60 days after this notification to decide whether to sign up. If you wait to start, you must pay the premiums for the intervening period, as if your coverage had been continuous, though that can be at the reduced rate if you qualify for the COBRA subsidy.

Incidentally, the December changes also help people who got the subsidy last year but dropped their policies after the initial nine-month period ended. They can get the extra six months of coverage if they don't delay too long. Basically, this involves paying the premium required under the subsidy program. Your former employer should notify you of this right automatically, but it would not hurt to contact the benefits folks.

[Skittles]

1. COBRA is still pricy

[Maraya1969]

5. What people keep forgetting is, I think starting this month

the government is going to subsidize most people's insurance payments anyway.

[leveymg]

2. Out of work for 7 mos? You probably didn't work for a bankrupt company & won't have $410/mo

to continue paying private health care coverage after long-term layoff. If you were terminated or were working part-time or were RIFed by a company that's still in business (or still provides health coverage), forget it, this doesn't apply.

This helps about 27 people. Pathetic FAIL. Like the foreclosure scheme that also narrows the eligible group down to a tiny minority of the millions of people who need help, but won't be getting it.

I really hate being spun by people who have themselves been mostly deceived. EPIC, HISTORICAL FAIL.

[Kookaburra]

3. I was laid off in February,

and was immediately eligible -- the govt has paid, and still does in fact pay 65% of the ins premium. It's a much better deal than I could get anywhere else.

[leveymg]

4. Where are you getting $5,000 a year to continue paying health coverage?

You would have gotten a better deal in practically any other western country. Sod it.

[Kookaburra]

9. I can't argue with you on that

What this country sorely needs is Universal Medicare for everyone.

My insurance premiums are $140/month (that's what I pay) -- I think that adds up to somewhere around $1600 a year, and I pay for them using the unemployment payments I'm receiving.

It's not ideal, but much better than if I'd had to pay the entire premium -- which I don't think I could and still keep the house.

[Maraya1969]

6. THANK YOU! It's time people started telling that the government

can help you more than you think. I have had government health care insurance and it has been great for me.

[FarLeftRage]

7. I HAD subsidized health care...

I used it all up to the maximum amount of time.

I've been jobless for nearly 2 years now.

Until I qualify for some form of health coverage, I'm not insured.

[CurtEastPoint]

8. Same here FarLeft. Used all 18 mos, the last 3 being FULL PRICE

Now, insurance-less. Gotta go six mos before I can qualify for the Ga. Uninsured group, AKA the 'untouchables' And THAT is pricey and has high deductibles, too. No way to win except Medicare for All.