COBRA Subsidy Extension: Congressional Xmas Gift or Xmas Trap?
Will Congress pass an early Christmas gift for the 10+ percent of the country who are presently unemployed by extending the COBRA subsidy?
While a COBRA subsidy extension remains uncertain, the healthcare Washington watchers that I follow now believe that Congress will eventually extend the law that subsidizes COBRA health care premiums for assistance-eligible employees. Will an extension be passed by Congress and signed into law by Christmas? It is still hard to predict, but if I were betting today, I’d say by Valentines Day 2010 is more likely. Afganistan and Iraq and the healthcare reform bill are getting top priority in Congress, which will likely pass a motion to recess for the holidays this coming week.
Democrats have introduced legislation outside of the health care reform bills to extend the COBRA subsidies. Current proposals include the House’s Extended COBRA Continuation Protection Act of 2009 and the Senate’s COBRA Subsidy Extension and Enhancement Act of 2009.
- The House bill would provide eligible COBRA participants with an additional six months of premium subsidies.
- The Senate bill includes the same measures, but would also increase the subsidy amount to 75 percent.
But no new legislation action have been taken on these measures and we’re now only three weeks ’til Christmas and Congress will be shutting down for the holidays shortly.
It is still not clear in the early stages of both the proposed House and Senate bills on this matter how any COBRA premium subsidy extension would be be made retroactive for those whose COBRA premium subsidy lapsed in November or will lapse in December or January.
For those who are sitting on the fence while waiting for a COBRA extension bill to be passed, I can only say you may be right or you may be crazy but you’re walking into a trap by subjecting yourself and your family to a lot of worry and financial risk. If your 65% COBRA subsidy has ended or is ending soon, and you are now facing paying almost three times as much for COBRA coverage as before, keep this in mind:
Any COBRA subsidy extension approved by Congress will likely be offered only to those who keep their COBRA coverage and decide to pay the higher, unsubsidized premiums. Individuals or families that let their COBRA policies lapse may not be eligible for any extension, as their policies will be considered lapsed.
I strongly urge anyone who is hoping for a COBRA subsidy extension before Christmas from Congress that you reread this entire post and consider the possible consequences of your inaction!
A wiser approach than letting your family’s health insurance lapse by not paying the unsubsidized COBRA rates would be to take a deep breath and write the now much bigger check for COBRA coverage and then write your Congressman and Senator and ask them to speed up the COBRA extension legislation. If the COBRA extension is passed and you stay on COBRA, then you’re likely to get the subsidy applied retroactive to when your extension ended, and your insurance company will then likely apply any extra premiums you paid to your next month’s premium bill.
If your financial situation is such that you cannot absolutely pay the higher premiums, then here are some of the strategies that you should check into first before you lapse your COBRA coverage due to nonpayment:
1.) Check out the Texas Chips program for covering any children in your family that are under age 19. This is a great program and very affordable coverage; you must income qualify, the only drawback is the 90 day wait period to get children approved for coverage, so don’t wait fill out an application to get them covered. For more information on the Texas Chips plan, follow this link.
2.) Ask your COBRA administrator (call the toll-free # on the back of your insurance card) how much COBRA coverage would be to cover only those family members with pre-existing conditions that would make them ineligible for an individual health plan. Then call me for advice and proposals for an individual health insurance plan for those family members who, because they have few minor or no health conditions, would qualify for an individual health insurance plan. I call this health insurance strategy “unbundling your family’s health insurance” and go into detail explaining how you can save money but still protect your family’s health in the COBRABusters.com workshops that I conduct throughout the Dallas Fort Worth metroplex.
As I attain further information on the COBRA Subsidy Act, I will post it at the COBRABusters.com website.
Just remember, if you don’t pay for your COBRA premiums because you’re hoping for a Congressional COBRA Subsidy Extension Christmas gift, you could be walking into a trap for yourself and your family.
Please forward this email message who those you know that have lost their jobs during this severe recession and may be in need of professional advice on what to do about their health insurance. I am not a pushy insurance sales type, I am an employee benefits professional who is a subject matter expert on COBRA and health insurance cost containment. Every day I offer individuals and businesses who value my expert and objective advice and counsel on insurance benefits, and it never costs anyone a penny extra to work with me vs. someone else. But there is a risk and possible cost to ignoring my advice and updates.
Feel free to subscribe above to the COBRABUSTERS.com newsletter, or call me if you need immediate assistance.
Kind regards,
Mike Chapman
TX insurance license #1235220
COBRABusters.com
Endeavor Group Insurance
6505 West Park Blvd.
Suite 306-312
Plano, TX 75093
214-764-6315
888-398-6246
