If you’ve lost your job and have to keep your health insurance through a COBRA, help is on the way, thanks to the economic stimulus package. But there’s a catch: No one’s certain when that help will arrive.
When President Obama signed the Economic Investment and Recovery Act into law a couple of weeks ago, funding went to subsidize 65 percent of COBRA payments for those unemployed between September 1, 2008 and Dec. 31, 2009 for nine months.
This is a huge relief to laid-off workers, since the cost of keeping your health insurance through a COBRA includes the employee’s portion of the premium, the employer’s portion of the premium, and 2 percent. So, this more than doubles the cost – and it’s not taken out of any income on a pre-tax basis.
The subsidy is great! Yay! But here’s the problem: Employers have no idea what they’re supposed to do or how to put this into place.
Here’s an excerpt from an AP story that ran today:
WASHINGTON – The Obama administration rushed to include a health care safety net for laid-off workers in the recently signed stimulus bill, but has not told employers exactly how to make it work.
As a result, tens of thousands of jobless people could wait months before getting help paying for health insurance that their employers previously had covered.
“Too many people are still trying to figure this out,” said Heath Weems, director of human resources policy at the National Association of Manufacturers. “There is a lot of confusion.”
At issue is the program called COBRA, the acronym for the law that allows workers to keep their company’s health insurance plan for 18 months after they leave their job, if they pay the premiums.
The policies are so expensive that only a minority of eligible workers sign up, often those with medical conditions that demand attention. Costs for a family of four can top $1,000 per month.
A $25 billion provision in the stimulus bill aimed to cut COBRA’s price tag, reducing its cost by 65 percent for workers laid off as far back as Sept. 1.
The bill gives eligible workers 60 days to apply. Then they get the reduced-cost premium for nine months.
But it’s not going to happen right away.
Employers are waiting for instructions from the Labor Department and the Internal Revenue Service on how to put the program into place. Both agencies posted some information online Thursday.
Until employers get the guidance they need and notify potentially eligible ex-employees, most workers will not apply for the new benefit. Many probably will not know it exists.
Count me as one of the folks who has encountered problems with the COBRA. See, had I not continued my coverage with a COBRA my insurance would have run out yesterday. As far as I know, I’m still supposed to pay the estimated $328 a month for my plan. My previous employer is left in limbo, but has informed me that any overpayment would result in a credit.
That’s fine and dandy, and thank goodness I can find a way to scrounge up the extra 200-some-odd bucks to pay for this month. But what about next month? And what about others who aren’t as lucky as me? It’s a big concern.
I hope folks can cut through the red tape soon and that more people will be able to be covered by health insurance. Health costs really do wear down this economy – and the more people we have in our emergency rooms because they have no health insurance, and the more unpaid medical bills we have, the worse it becomes for all of us.
I’ll be calling my Senator tomorrow.