Lobbyists and those close to the congressional action in Washington, DC are saying that a provision to subsidize COBRA premiums to individuals who have lost their jobs may be included in the new economic stimulus package.
Details on the proposed health insurance “bailout” are sketchy, but it’s reported that the government would pony up 50-60% of the bill. The Chairman of the Senate Finance Committee, Max Baucus (D-Montana) said A federal COBRA subsidy “has been pretty much agreed to”.
Apparently, President-elect Obama is on board with the provision too. Speaking at George Mason University on January 8, he said his economic recovery plan would provide extensions of coverage for those who have lost their jobs and can’t find new ones.
COBRA is a continuation of employer-based health insurance that departing employees can elect. It is guarantee-issue (meaning the ex-employee can not be turned down for coverage regardless of pre-existing conditions) coverage.
According to a Hewitt study only 20% of those offered COBRA elect to take coverage. A big reason for this is that the premiums are 102% of the full amount the employer was paying for their coverage. Employees typically don’t realize how much their employer is paying for their coverage so when confronted with having to pay the entire cost themselves often they are left with sticker shock.
Individual health insurance is almost always less expensive so perhaps Congress would be wise to include a voucher for individual coverage (if the person qualifies). That way an incentive would be provided for them to seek out a less expensive policy that won’t expire after 18 months like COBRA.
Want to know if I qualify for the 65% reduction in my health care premiums. Have been unemployed since Sept. 2008. I chose to continue coverage through my former employer. However the “family plan” is over $1000 per month. Will this plan be “retroactive?”
The subsidy is available to eligible individuals who have been “involuntarily terminated” from September 1, 2008, through December 31, 2009, for a maximum of nine months. If an individual is involuntarily terminated on December 31, 2009, they may have the benefit of the subsidy through September 2010. An employer would be required to provide the 65% portion through that same time period. The U.S. Department of Labor is expected to define “involuntary termination” on or before March 19, 2009.
Does anyone know is the definition of premium assistance includes employer contribution into the health savings accounts, as well as the HDHP?
Background: the employer plan is a group HSA with the employer contributing to both the HDHP and the account.
Scott,
I’m 99.999% sure that the premium assistance does not include employer contributions to the HSA plan. You would be responsible to fund the account after your employment ceased.