Medical Insurance Blog

Obama Faces Defeat Regarding Cobra Medical Insurance Subsidy

The 65% Cobra medical insurance subsidy that the government had been contributing for ex-employees' medical insurance premiums expired on May 31st, and Congress is not wanting to renew it, even though the President is pushing for it.  About 1/3 of workers that were eligible had enrolled in the coverage that was subsidized.

Democrats have been divided on adding billions of dollars of costs to the growing federal deficit in a mid-term election year.  Two Democrats, from Pennsylania and Ohio, have recently written a measure that costs $7 billion that would extend the program for people that lose their jobs through November 30th.  This measure would extend unemployment and make numerous alterations in federal programs.  Lawmakers are voting this week.

Denied COBRA Medical Insurance Premium Reduction? Expedited review.

In the event of losing your job you maybe able to keep your last employers group medical insurance coverage. The American Recovery and Reinvestment Act of 2009 (ARRA) may make it possible for you to keep your employer-sponsored medical insurance coverage. The American Recovery and Reinvestment Act of 2009 (ARRA), as amended by the Temporary Extension Act of 2010 (TEA) on March 2, 2010, provides for premium reductions for medical insurance benefits under the Consolidated Omnibus Budget Reconciliation Act of 1985, or as we all know it, COBRA.

The premium assistance program is also available for continuation coverage under some State laws. Individuals that are eligible pay 35% of their COBRA premiums; the remaining 65% is recieved by the medical insurance coverage provider through tax credits. The medical insurance premium reduction applies to periods of medical insurance coverage that began on or after February 17, 2009 and lasts for up to 15 months.

To be eligible to receive the reduced premiums:

• You MUST have an employer sponsored continuation insurance coverage election opportunity (qualifying event)* related to an involuntary termination of your employment that happened at some time between September 1, 2008 and March 31, 2010;

• You MUST elect the continuation of coverage (within the time allowed);

• You MUST NOT be eligible for Medicare; AND

• You MUST NOT be eligible for medical insurance coverage under any other group health plan, such as a plan sponsored by a new employer or your spouse's employer.

For more information please visit:
Denied COBRA Premium Reduction
http://www.dol.gov/ebsa/COBRA/

 

Advantages and Disadvantages of Not Using COBRA Alternatives

COBRA alternatives are necessary because the program costs more than most people can afford. This law exists to provide continued health coverage after an employee leaves a job. Coverage is only intended to be temporary. When a person is faced with the choice between purchasing private health insurance and continuing with group health care insurance through COBRA, they must act quickly because they have a 60 day window to enroll in the COBRA plan. COBRA is the acronym that is short for the Consolidated Omnibus Budget Reconciliation Act. This law protects people by allowing the individuals that are eligible to continue their group health care plan for up to 18 months.

 

Eligible people have a limited time to make their decision about whether to proceed with the plan under COBRA or to instead choose a plan offered through an independent health insurance agent. After 60 days, the person is no longer eligible to use the benefits protected by COBRA.

 

Here are the advantages of using the COBRA plan:

 

·        Coverage is guaranteed for up to 18 months as long as premiums are paid on time without interruption. There is no guarantee that everyone can find coverage in the private sector. COBRA allows the covered person to continue the policy they had while working for their former employer without interruption. This removes any worry about spending time looking for an alternative to COBRA.

 

·        Group medical insurance plans usually have a lot of bells and whistles such as low deductibles, high dollar coverage, and a long list of providers and conditions that are covered. Sometimes it is difficult to find similar choices with private medical insurance.

 

·        Pre-existing conditions are often excluded for at least 12 months on private health insurance plans. The length of time the exclusion continues depends entirely on the company. A person covered through their former employer’s group health insurance plan does not have to worry about pre-existing conditions, at least while the coverage continues.

 

Disadvantages of continuing with the plan through COBRA:

 

·        If a person misses a payment, coverage can be canceled. Once the policy is canceled, it cannot be reinstated. COBRA law requires the insurance company to send notices of nonpayment for cancellation; however, it is easy for a person to miss the notice, leading to an increased likelihood that the policy will be canceled.

 

·        Premiums on a group health care plan are very high in comparison to private plans. The law requires that the covered person pays 100% plus a 2% penalty of all premiums. People often find that their premiums through COBRA are up to three times higher than private health insurance plans.

 

·        COBRA is a temporary fix to a health insurance problem. The very fact that coverage is temporary can be a problem if the covered person finds a job that does not offer healthcare benefits.

 

Experts recommend that people find an alternative to COBRA as soon as possible to save money and to obtain a policy that is not temporary.

COBRA Alternatives May be Needed if COBRA Eligibility is in Question

There are certain eligibility requirements that must be met in order for a person to qualify for COBRA benefits. The Consolidated Omnibus Budget Reconciliation Act was enacted by Congress to protect people from losing health insurance due to the loss of a job, the death of a sponsoring family member, a divorce, the death of the sponsoring family member, and other life altering events that are deemed eligible.

 

Usually, if a person leaves a job, they have the right to purchase health insurance on the group medical insurance plan sponsored by their employer for up to 18 months, due to the provisions of the law under COBRA. The employer is required to notify the former employee of the cost of their insurance premium in writing. Employers also give a verbal explanation at the exit interview.

 

There are some cases where people find out that they are not eligible to receive extended health benefits under COBRA provisions. The people affected are unpleasantly surprised when they discover their status, if ineligible. If a person discovers he or she cannot receive benefits under COBRA, there are other options that are available and they must act quickly because time is of the essence. Most insurance companies will not cover pre-existing conditions if there is a break in coverage of more than 60 days, so it is important that if a person is recently separated from their job that they contact a health insurance agent so they can understand all of their options.

 

Here are a few of the situations that cause people to be ineligible for benefits under COBRA:

 

·        The law only requires companies with over 20 employees to provide benefits under the laws governed by COBRA. Employees who work for companies that have fewer than 20 employees are not eligible for benefits under COBRA. If they leave their job or are terminated, they lose benefits at the end of the specified coverage period. In most cases, coverage ends at the end of the month the employee is terminated. People who fall into this category need to contact a private health insurance agent as soon as possible to purchase an individual policy.

 

·        Many companies in this economic crisis are doing everything they can to eliminate expenses. Health insurance coverage for employees is a big expense for businesses. Employees should be aware that their company could cut health insurance benefits or eliminate them altogether. If that happens, the employee is not eligible for benefits under COBRA.

 

·        Sometimes, people who are paying for continued health insurance benefits lose their eligibility when they miss a payment. The law states that if people fail to pay for their coverage at any time, they can lose their eligibility status. Although COBRA requires the insurance company to send out a cancellation notice when a person misses a payment, people do not always see the warning letter. That is why it is imperative for people to watch for any notices from their insurance company.