Cobra update

Awhile back I wrote a post about Cobra coverage and I was excited that the administration had passed as part of the stimulus pkg, a deal where the govt would fund 65% of cobra payments for a 9 mos period. The hopes was to allow more unemployed families, the chance to afford the Cobra coverage and give families health insurance while they were looking for a new job and new health insurance coverage. I was really excited about it, as it sounded like it was going to be a big help to us. With us paying 35% of the cost our health insurance, this was going to be alot cheaper than what I was paying as an employee. I unfortunately worked for a company where the costs had been steadily rising for years and the company had been passing the extra costs off to the employees and the employer was paying for less and less, of the health care costs for us. I was paying almost $800.00 a month for medical, dental and vision care for the family. With the cobra plan and the 35% option for 9 months I am looking at $470.00. So sounded like something we couldn't pass up on. When I first talked to my previous employer, the plan had just passed into law and they didn't have all of the details yet. They now have more details and while this may still be a good deal for us, it will mean a huge outlay of money to get it started and I wonder if the govt thought of that when they put this into place. Most unemployed families are not going to have the money to get this plan rolling.





The plan started March 1, so I would get 9 mos of coverage at 35% thru the end of November. I was laid off in January and lost my health insurance coverage on 1-31-09. I had to till 4-1-09 to mail in my initial application requesting that I wanted to continue with the cobra coverage. I have till 5-13-09 to get the first payment premium paid. The first payment premium though covers all of the in between months. So I owe for Feb, March, April and May when the first payment goes in. I know Cobra is continuation of coverage but since we had only one small medical bill in February, at this time it seems crazy to go back and pay for months of coverage that have all ready passed and we have used nothing, but that's not the way cobra works.





So February would be calculated at the full premium price, march, April and May at the 35% cost. And so forth. Ok this is a better health insurance deal for us, but that's still a heck of alot of money to outlay at one time, when you are unemployed. Oh but wait, when I called in to ask a few final questions when I was mailing in my initial application to continue with Cobra, I was told some more happy news. I should have known there would be another speed bump to get over. Turns out since this is such a huge undertaking to get this plan implemented by Cobra, that the govt gave them several months to get the plan working. Which means they say they needed time to get their selves up and running with the new program. Hmmmm.... So what that means to me and everyone else, is this. If you are trying to get yourself onto this plan now, you are going to have to jump thru a few more hoops financially to get onto this plan, than say someone who gets laid off later, in this year. So Cobra tells me it will be June by the time they have a new system up and running and are able to bill people at the correct 35% rate. SO they are allowed to, by law, collect the normal full premium payments until that time. So I actually owe the full Cobra premium for the months of Feb, March, April, and May, when the first payment goes in. Then in June the system will be able to go back and calculate all of the money I have paid in and give me a 65% credit for the months of March, April and May, because I overpaid, which they will apply towards future monthly premiums or give you a refund if you decide to drop the coverage. So 4 mos at full cost is going to be over 5K!! to get started. While I realize that with all I will be overpaying upfront, that I will have enough in credit to pay for all of my insurance thru November, and I wont owe anything else until December, its the principal of the thing. Yes, in the end I will get the insurance for 9 mos at the 35% cost BUT at a large upfront cost. What unemployed family can afford 5k upfront? $470.00 a month is still alot when money is tight, but its sure a heck of alot more budgetable on a monthly basis.



Is this really what the govt was thinking when they started this plan??? Families that experieince lay offs after June and decide to get onto cobra will not have to go thru this mess, they will just auto start paying at the 35% rate, so thank goodness for that, but those of us now trying to get onto this and take advantage of this program are not being helped out financially at all!



I have no options, I either make the payment in May or I give up the Cobra option. So more thinking to be done. The application was sent in to at least keep the option open for us, so now I have until Mid May to decide, what to do.