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FAQ: When Should I Sign Up For COBRA, Part 3

cb — Sat, 05 Feb 2011 21:41:47 +0000

One of the most often asked I get during COBRABusters workshops is if someone should wait until close to the 60 day deadline to make a decistion about COBRA coverage.

There are three important reasons why you shouldn’t delay. Each reason is an opportunity cost. This post deals with the third and most costly reason and opportunity cost. If you have not already done so, you can read here the posts about the first reason here and the second reason here why you shouldn’t delay your COBRA decision.

The third reasonwhy you shouldn’t delay is something I see over and over again with jobseekers. About 55 days after termination is usually when when many people worry about COBRA.

But 55 days into a job search (with no or little income coming in) is exactly when a job searcher should really have their job search ramped up, with a fine-tuned resume or resumes and cover letters, business cards, their target companies and positions identified, they should have developed and mastered their thirty second commercial, answers to interview questions, etc.

The first one or two weeks into a job search is exactly when you should develop a new personal budget, determine what they can do to reduce their cash outflow, and make their decision about your medical insurance.

Even if you don’t have to implement the decision until later, at least you have resolved the issue in your mind (and your spouse’s mind). Making a healthcare decision right away eliminates stress and lets you focus 100% on your job search/marketing campaign starting in the second month.

If you wait until close to your 60 day COBRA deadline to explore options and make a decision, you’ll lose focus and expend energy that should go into your job search campaign.

Every month you’re unemployed is another month in which you have to pay their own health insurance premiums, vs. landing a job with an employer that will pay your health insurance premium for you. This represents a huge opportunity cost.

As a job seeker, you are conducting a vital marketing campaign to help win not just any old job, but “the job” that you really want and are passionate about, and not the job that you have to accept to pay the bills.

Every day in job search mode is a day with big opportunity costs. Not only are you not earning an income and paying for your own insurance, but you are expending a tremendous amount of mental and emotional energy. There are few things more stressful and exhausting in life than being out of work and searching for a new job. And for every day someone you are out of work, your job search is a day longer, and the days quickly stretch into weeks/months/and even years.

I know first hand and from the folks that I talk to that the emotional and mental toll of a job search on families and marriages is tremendous. The longer you’re unemployed, the harder it is to explain your employment gap to a potential hiring authority, recruiter or referral source. And regardless of your past career successes and qualifications, the longer you are in the job market, the less desirable you are perceived vs. other people in job search mode that are competing for the same job.

In today’s lousy job market, there are hundreds if not thousands of qualified candidates for every job opportunity that is posted. And the same goes for the “hidden job market” of jobs that are only accessed through referrals and networking. The longer you are out of work, the less likely you are of even being referred for these hidden jobs.

Worse yet, the longer you are out of work, the more likely you are to take any old job, not the job yo really want. Unfortunately, this often leads to a second, more costly, and more difficult to explain job search, within a year or less of accepting that “any old position.”

In summary, the third reason to make a decision about COBRA as soon as possible is that as a job seeker, you are in competition for the same coveted few positions as perhaps hundreds or thousands of other job searchers. If, at 55 days into a job search, you are wastin your valuable time exploring options and applying for coverage or filling out and overnighting your COBRA election forms, while your competition is working hard to build their networks, meeting with potential referral sources, and interviewing, who is likely to get hired first? And who is likely to earn income first and have their insurance premiums paid by their new employer?

Just like the fighter that lets down his right guard for a split second in the tenth round and gets TKO’d by their opponent, or the golfer that took his eye off the ball before making contact, the job searcher that delays a COBRA decision until right before a deadline gives their job competition a huge advantage over finding a job and getting hired.

The mental and emotional toll from even a short job search on an individual and their family is huge, and missed opportunities in a job search can often be traced back to lack of focus and not taking action. And with a little soul-searching, perhaps being reluctant to make decisions about COBRA is an indicator of a tendency to avoid making other decisions and taking action.

If this sounds like someone you know, please forward this post to them. Make decisions quickly, implement your decisions when it benefits you most. Stay focused on your goal and devote your talents and all your energy towards reaching your goal. Avoid procrastination and anything or anyone that diverts your attention on reaching your goal.

FAQ: When Should I Sign Up For COBRA, Part 2

cb — Sat, 05 Feb 2011 21:37:33 +0000

One of the most often asked I get during COBRABusters workshops is if someone should wait until close to the 60 day deadline to make a decistion about COBRA coverage.

There are three important reasons why you shouldn’t delay. Each reason is an opportunity cost. This post deals with the second costly reason and opportunity cost. If you did not read the post about the first reason, you can find it here.

The second reason is this: Chances are good, it won’t get there in time. It is highly risky to wait close to 60 days to elect COBRA as your COBRA election must be received by the 60th day.

If you wait until the 58th or 59th day, then you better overnight the form at your own expense because if you don’t have a delivery/receipt confirmation by overnight delivery or certified mail then it is your word vs. your COBRA administrator’s word whether they received it within 60 days.

So you’ve blown some extra cash in overnight mail and delivery/receipt confirmation, just to prove somebody received it.

In the years I’ve been advising people through the COBRABusters workshops, I can recall several instances where someone was denied COBRA because their COBRA administrator claimed they did not receive the check and the ex-employee had no documented proof otherwise. If your COBRA administrator takes a hard line on this, you could be denied COBRA, which for adults with pre-existing conditions is the only coverage option.

Risking insurability is the second reason why you should not delay your COBRA decision, but the third reason is potentially more expensive than reason one or two.

FAQ: When Should I Sign Up For COBRA, Part 1

cb — Sat, 05 Feb 2011 21:35:48 +0000

One of the most often asked I get during COBRABusters workshops is if someone should wait until close to the 60 day deadline to make a decistion about COBRA coverage.

There are three important reasons why you shouldn’t delay. Each reason is an opportunity cost. This post deals with the first and least costly reason and opportunity cost.

Technically, if your coverage expires on your termination date, you already have a gap in coverage from the next date forward, so you willat least have to fill this coverage gap by paying for COBRA retroactive to when your coverage ended, so that whenever you get new coverage in place you won’t have a gap in coverage, whether or not you decide upon COBRA or other coverage.

So even if there is health insurance that is less expensive than COBRA, the longer you wait to to explore your options and complete an application, the longer you will have to purchase more expensive COBRA for that period, plus you should figure on about two to four weeks for your application to be approved.

Alternate coverage, if eligible, is usally about a third less expensive than COBRA. Waiting until close to sixty days to explore alternatives and decide whether to elect COBRA means you’ve perhaps spent a third more for the sixty days since your termination, plus another thirty days while an application for alternate coverate is completed and approved.

As an example, if your family’s COBRA premium is $1,500 per month, your opportunity cost is extra $500 vs. what you might be paying for alternate coverage.

Believe it or not, this represents the smallest opportunity cost and least important reason not to wait until close to 60 days to elect COBRA. To learn about the other reasons why you shouldn’t delay, follow this link to the next post.

How & Where to Appeal if You’ve Been Turned Down for the ARRA COBRA Subsidy and State Continuation Subsidy

cb — Thu, 28 May 2009 21:12:53 +0000

The Department of Labor have created a nifty web page where individuals can appeal if they feel they have been unfairly turned down for the ARRA COBRA and State Continuation 65% premium subsidy.

You can file an online appeal directly to the Department of Labor (the fastest way), or you can fax or snail mail a written appeal if you use the DOL appeals form located here.

The above webpage also gives some great guidance to help individuals to decide whether they have the grounds to appeal a denial of the ARRA COBRA and State Continuation subsidy from a former employer.

IRS Publishes 58 new COBRA Subsidy FAQs

cb — Fri, 03 Apr 2009 18:27:58 +0000

You really gotta love the federal government for trying to “clarify” what they intended with American Recovery and Reinvestment Act (ARRA). The IRS has posted 58 new FAQs on their website that hopefully will clarify earlier clarifications.

Here’s the link to the information: http://www.irs.gov/pub/irs-drop/n-09-27.pdf

Mike Chapman

Department of Labor COBRA Website, and the American Recovery and Reinvestment Act of 2009

cb — Fri, 13 Mar 2009 15:05:52 +0000

The Department of Labor is required to issue guidelines the week of March 16th on how employers, insurance carriers and COBRA administrators should implement the COBRA subsidy for involuntarily terminated employees.

From what I’ve read, this is not going to be easy on employers, and there are specific guidelines that must be followed for employers to locate, contact, and advise terminated employees of their right to apply for COBRA and State Continuation at the subsidized rates. And there will be quite a bit of paperwork for employers to complete in order to be reimbursed for the subsidy. I wouldn’t at all be surprised if the guidelines get delayed or if only partial guidelines get issued next week, with more details promised later.

The Department of Labor has a webpage here where they will post updates and guidances on the COBRA subsidy implementation. Right now, every article and HR/legal expert is referring and quoting this DOL source, so check it out. As soon as the DOL guidelines are published at this site, I’ll try to boil it down into something that terminated employees and employers can understand.

Listen to replay of COBRA and Economic REcovery Act of 2009

cb — Fri, 27 Feb 2009 05:39:53 +0000

Here’s the information to listen to the March 25th recording of the Telseminar on the COBRA subsidy contained in the Economic Stimulus Act of 2009.

Unfortunately, I have been unable to get a clean quality mp3 of this teleseminar, but you can listen to the replay by calling 712-432-1080, and then entering the listener access code 688338#.

If anyone reading this post is able to convert this recording into a quality mp3 recording, I’ll post it for download at this site.

Thanks again for visiting this site, and as more details of the COBRA subsidy become available, I will post updates on this site.

Mike Chapman

Teleseminar Details to Discuss Impact on Job Seekers of the Economic Stimulus Act

cb — Fri, 20 Feb 2009 15:13:45 +0000

I’m conducting teleseminars in the evening on Tuesday Feb. 24 and Wednesday Feb. 25 to discuss the impact of the Economic Stimulus and Recovery Act upon job seekers. We will discuss the COBRA subsidy and the favorable tax treatment of unemployment benefits that are part of this law.

Each Teleseminar will hold 100 people, but cach call will be recorded and posted the next day so those who miss get access to the information.

The Economic Stimulus and Recovery Act and YOU!

cb — Thu, 19 Feb 2009 21:04:10 +0000

Economic Stimulus & Recovery Act and YOU

The Economic Stimulus and Recovery ACT that was signed into law on February 17th contains provisions that impact virtually every citizen and every business in the country.

Many of the details and specifics in the bill are unclear or have not yet been worked out. There are numerous questions about how this new law affects job seekers who have been involuntarily terminated. Specifically, employees (and their dependents) who are involuntarily terminated from from September 1, 2008 through December 31, 2009, who is or was eligible for COBRA or TX State Continuation benefits will be able to receive a 65% subsidization of their COBRA benefits for a period of up to nine months.

In addition, these same individuals may be eligible to receive a tax credit on a portion of their unemployment compensation, dependent upon their income level.

Like most federal legislation, the devil is in the details, and how this will work has not yet been determined. I am working hard to get the facts and the details on this legislation to share it with you. I will be conducting a teleseminar next Tuesday, February 24th and next Wednesday February 25th for job-seekers from 7 pm to 8 pm each evening to explain what is known at this point about the legislation and how it affects their unemployment and COBRA decisions, and to answer any questions. Each teleseminar will hold 100 callers. The teleseminars will be recorded and will be available for download the following day for those who were unable to join us on the call.

To get the job seeker teleseminar details and the phone number to call, just subscribe to the COBRABusters.com newsletter at the right and I’ll send you the information.

I will also hold a special teleseminar for employers and HR professionals only on Wednesday February 25th from 2 to 3 pm to review the specifics of the bill on employers and share the available details of the impact of this law on employers. The bill requires employers to subsidize COBRA payments of employees who have been terminated during this time period by 65%, and employers will in turn be reimbursed somehow for these subsidies, and there will be new record keeping requirements for employers and this will be of this teleseminar.

Please refer this post to your company and HR professionals so that they can get this information. They can subscribe to the www.GroupBenefitsAdvisors.com newsletter to get all of the details about this employers and HR professionals only teleseminar scheduled for Wednesday, February 25th.