Posted by marykeating on March 24, 2010 under Employment benefit issues, Pending legislation | 
Congress keeps tweaking COBRA subsidies to deal with the sustained unemployment rate. In December the COBRA subsidy was extended until the end of February. People eligible for the subsidy will have to pay only 35% of the monthly premium, while the employer pays the rest, and takes the cost of the 65% premium as a credit against withholding taxes. Congress added a month, and has not been trying to extend it further. Last week the House of Representatives passed a bill to extend COBRA subsidies until the end of April. Meanwhile the Senate passed a bill to extend the subsidy period through to the end of 2010. Both bills must be passed by the other house, though it looks as though there will be no problem making the April extension into law in time. American Workers, State and Business Relief Act of 2010.
Posted by marykeating on December 25, 2009 under Employment benefit issues |
Yesterday morning, on Christmas Eve, the Senate passed its version of the Patient Protection and Affordable Care Act. Whether the law will be good in the short or long term is now unknown, but it will allow many more people to obtain health insurance who were otherwise considered uninsurable.
And earlier this week, on December 21, the President signed a law extending the COBRA subsidy. The subsidy is available for a maximum of 15 months. As discussed here a few months ago, the COBRA subsidy reduces the premium for the terminated individual to 35% of the full freight; the employer pays the remaining 65%, but receives a dollar-for-dollar credit against withholding taxes, so it’s really just an advance. Employees who were eligible for the original COBRA subsidy can extend their coverage at the reduced cost through February. (These were employees involuntarily terminated between September 1, 2008, and December 31, 2009; now the termination cutoff date is extended through February.) Employees who dropped the coverage as too expensive will be given the option to rejoin the plan.
Posted by marykeating on December 2, 2009 under Employment benefit issues, Pending legislation |
The discussion about health care reform has increased awareness of the high cost of health insurance for people who are not in a group plan. While employed and in an employer-sponsored plan, an employee usually gets a reasonable plan for a pretty reasonable price, or even free, depending on the employer’s policies. But then the job ends, whether voluntarily or not. If the employer has at least 20 employees, the departing employee is entitled to COBRA coverage for 18 months, in most cases.
With unemployment still high, Congress is now thinking about extending the COBRA coverage for six more months, for those people who lost their jobs between April 1 and December 31 of 2009. In addition, even better for some, the COBRA subsidy discussed here would be extended as well. The subsidy has the federal government picking up 65% of the cost of the premium, which is repaid to the employer by a credit on the payroll taxes. If passed, the new law will be called the “Extended COBRA Continuation Protection Act of 2009.”
It’s hard to think of an interest group that would oppose this law, other than those who think that the government is subsidizing the unemployed too much.
Posted by marykeating on July 22, 2009 under Employment benefit issues |
The Baltimore Sun reported this morning on a non-scientific poll of small businesses conducted by the Public Interest Research Group. Small businesses often find themselves unable for financial reasons to offer health insurance as a benefit, even where employees pay a portion of the costs of coverage. Local businesses are similarly hamstrung. Those that offer insurance do so as a way of attracting the caliber of employees they need, but apparently are not doing so happily.
The cost of health insurance has risen steadily over the past few decades, faster than inflation; perhaps only college tuition prices have shown a similar independence of the inflation rate. According to the National Coalition of Health Care, premium costs for a family of four topped $12,000 per year. It’s no wonder that many employers do not offer insurance coverage, or require employees to pay an increasing share of it. In an era when wages are not rising, this hurts, though not as much as not having insurance at all. Then, when an employee becomes unemployed, COBRA or its state equivalent requires the employee to pay the entire cost, plus a 2% administrative fee. (But see the limited period of relief that Congress has granted.) Still, COBRA ends after 18 months, after which the employee’s options are often limited to a state health pool, or a private plan.
When did health insurance become a common fringe benefit? It is somewhat arbitrary that the American worker or her family is dependent on a certain type of job (full-time, with a larger company) to enjoy health insurance coverage. Apparently during World War II, the government had to approve wage increases. In order to attract workers some companies added attractive fringe benefits. Unions, likewise, bargained for generous health insurance coverage. Sixty years later, the climate has changed dramatically. Perhaps the time is right for a centrally provided health insurance agency. Then we’ll see how the large companies use the savings.
Posted by marykeating on July 14, 2009 under Employment benefit issues |
COBRA has been around since 1986, providing employees with a limited time option to continue with the health insurance coverage that they had while employed. Unless the employee is disabled, the coverage lasts for a maximum of 18 months; for a disabled employee, the coverage extends for 24 months. The coverage ends when the employee obtains alternate coverage or stops paying the entire premium. COBRA also provides an avenue for a newly unemployed person to join a spouse’s or, in limited cases, a parent’s coverage through another employer, without waiting for an open enrollment period. Many newly unemployed people find the premium payment onerous, however, especially if they enjoyed a family coverage policy.
Trying to deal with the state of the economy, Congress gave some premium relief to laid off employees. Under the American Recovery and Reinvestment Act of 2009, employers must pay 65% of an employee’s COBRA payment for employees laid off between and December 31, 2009. While employers will front the cost of the insurance premiums for COBRA-eligible individuals, the federal government will issue a payroll tax credit to the employer to compensate for the portion underwritten by the employer. You can read the law here.
COBRA is available to employees who quit or were terminated for reasons other than gross misconduct. COBRA applies only to employers with at least 20 full-time employees. The subsidy under the With the American Recovery and Reinvestment Act of 2009 phases out as the gross income of the employee rises.
For smaller employees in Maryland, the state mini-COBRA law kicks in. Employees are entitled to continue on health insurance coverage, provided they pay the premium plus, at most, a 2% administrative charge. Smaller employers are also subject to the premium relief system, but do not have to advance the 65% of the premium that larger employers do. Under theMaryland health insurance continuation plan, the health insurance carrier provides the appropriate forms to the laid off employee, and it will accept the 35% premium sent by the former employer. Then the insurance company will then get the tax credit provided by the federal government to cover the 65% premium payment not paid by the unemployed person.
