FAQs on COBRA and ARRA

I'm still not used to the new ARRA acronym (for American Recovery and Reinvestment Act of 2009) but a year ago I couldn't have explained the meaning behind COBRA, either. (COBRA = Consolidated Omnibus Budget Reconciliation Act of 1985)

When the two acronyms come together, it is to describe the extension of health care benefits for employees facing lay-off. ARRA provides help in paying the premiums for people who lose their jobs in 2009 or (looking backward just a bit) in the fall of 2008. So, the span of September 1, 2008 to December 31, 2009 is covered. The support is meaningful: 9 months of reduced premiums that will allow many families to keep their insurance.

The U.S. Department of Labor has updated their web pages to explain COBRA and ARRA. I think the fastest way to read about the provisions is through Questions and Answers, and the Labor Dept does that well on their FAQ page. Note the "Printer Friendly Version" link. That permits you to move to hard copy and highlight the portions that apply to your situation.

On a personal note: For my immediate family, COBRA is a frequent topic. Tom Bold was laid off in Spring 2008 and so is on his last several months of COBRA coverage. He was not eligible for the ARRA provision but did receive 9 months of coverage from his former employer; we are humble about that, realizing that it's not the typical support of the newly laid off. I retired from a position in September 2008 and began paying for COBRA at that time. I am not eligible for ARRA support because my retirement was voluntary. One of our offspring was recently laid off and is covered by the ARRA support for COBRA. Our other offspring? Employed. Good!

© 2009 Mary Bold, PhD, CFLE. The content of this blog or related web sites created by Mary Bold (www.marybold.com, www.boldproductions.com, College Intern Blog) is not under any circumstances to be regarded as professional, legal, financial, or medical advice. Or education advice. Or marital advice. Or even a tip.

The final stimulus plan: COBRA subsidy

Last night's best "fast read" of the stimulus plan is from MSNBC.

I've been tracking the progress of health care insurance provisions, specifically for the two laid-off folks in my immediate family. One will benefit from the stimulus plan; the other won't.

The family member in Texas was laid-off in Spring 2008, which is well ahead of the new support (covering lay-offs in Sept 2008 and later). He might have benefited from another clause but it was removed in the final version of the stimulus package. (That would have allowed COBRA continuation to Medicare age, a plus for people whose insurance under COBRA is less expensive than an individual plan. Typically, that's people who are 60+ years of age.)

The family member on the east coast was laid-off in 2009, and will (presumably) have the support of 65%-subsidized COBRA for 9 months. For the final 9 months of coverage, there will not be a government subsidy. Such a subsidy will especially ease the way for families who routinely see COBRA cost of $1000/month.

(For me? Well, I'm using COBRA at present but that follows a retirement, not a lay-off, in 2008.)

The variety of needs, whether for COBRA or other health insurance, cannot be overstated. The stimulus package will help a lot of people through the COBRA subsidy and also through Medicaid support. But there will also be folks with slightly different needs, in slightly different situations, who will not be served. And, of course, health insurance is just one part of survival after a lay-off.

© 2009 Mary Bold, PhD, CFLE. The content of this blog or related web sites created by Mary Bold (www.marybold.com, www.boldproductions.com, College Intern Blog) is not under any circumstances to be regarded as professional, legal, financial, or medical advice. Or education advice. Or marital advice. Or even a tip.

COBRA from another angle

I tend to take COBRA news personally. What emerges from the final stimulus package may well affect me personally but I appreciate what all this news means to employers, too.

For the great majority of employers, COBRA health insurance has been the very short bridge (technically up to 18 months but typically just a few months) offered to a limited number of ex-employees (some reports say less than 10% of ex-workers and other reports say less than 20%) at some percentage of the actual premium (often up to 102%).

That doesn't sound so bad except that employers regularly see the claims from these ex-workers go up, so that the "loss ratio" is around 150%. Put bluntly, the premiums collected from the ex-employees won't necessarily cover the medical costs billed.

The reasoning behind those figures is that the kind of people who purchase COBRA insurance (remember, just a fraction of the ex-employees who are eligible for it) are the kind of people who either (a) do not dare live without coverage because they have health issues, or (b) cannot find affordable insurance on their own because they have health issues. Especially aging ex-employees with pre-existing conditions are likely to purchase COBRA even if the premiums are high.

As employers observe (some with rancor), ex-employees on COBRA may use the bridge time to tend to a myriad of medical needs. Perhaps the ex-employees are uncertain about future medical coverage and therefore want to take advantage of the COBRA insurance while they have it. Or perhaps they simply have a lot of time to devote to doctor's visits.

COBRA was tolerated because not too many people used it. And those who did use it rarely needed the full allotment of 18 months. And for larger employers making intermittent lay-offs, COBRA was an attractive element of a severance package. For example, an employer might offer the laid-off employee "free" COBRA coverage for 6 or 9 or 12 months, after which the ex-employee would pick up the full premium (up to 102%).

Right now, that same employer is worried about the impact of COBRA in a Mini Depression. Record lay-offs immediately translate into more COBRA elections than ever experienced before. (Paperwork and processing costs go up, too, because everyone has to be notified repeatedly of the COBRA option.)

A likely product from Congress will be a federal subsidy to assist newly laid-off workers in purchasing COBRA insurance. That will probably be limited to lay-offs that started in late 2008 and 2009, and to a limited number of months. That subsidy will encourage many more ex-employees to elect to purchase COBRA on the basis of new affordability—and also because they will not feel confident about finding new employment any time soon.

Employers fear the impact of another possible element of the stimulus package: the requirement to offer COBRA coverage to ex-employees who are 55 or older, and younger ex-employees who were employed for 10 or more years with the company. The provision would allow these ex-employees to utilize the COBRA election (without any federal subsidy) until they reach Medicare age.

Employers are looking at their budgets closely to plan for what will surely be a costly event, regardless of what is eventually passed by Congress. One moderating factor is the likelihood that with larger numbers of COBRA participants, the loss ratio will drop. But analysts cannot say how much that drop may be.

© 2009 Mary Bold, PhD, CFLE. The content of this blog or related web sites created by Mary Bold (www.marybold.com, www.boldproductions.com, College Intern Blog) is not under any circumstances to be regarded as professional, legal, financial, or medical advice. Or education advice. Or marital advice. Or even a tip.

Potential COBRA Supports

Potential supports for health care, currently being debated in Congress:

Extended COBRA (up to Medicare age) for workers age 55+ and workers with 10+ years with an employer.

Subsidized COBRA (up to 65% of the cost) for people laid off between September 1, 2008, and December 31, 2009 (but probably just for 9 or 12 months).

Extended COBRA with cost limited to 35% (rather than 100%) of the premium.

Entry to Medicaid programs for unemployed, low-income adults.

Incentives to health providers to convert records to electronic systems, which have been shown to increase efficiency and reduce costs.

All these proposals are in play, in the House or the Senate. Emphasis is on people who were/will be laid off in a specific time frame. The need for help resides in a basic COBRA statistic—only 9% or 10% of qualified workers purchase COBRA following separation from a job. The reason is clear: the premiums are too high to cover when the household income has just been slashed.

© 2009 Mary Bold, PhD, CFLE. The content of this blog or related web sites created by Mary Bold (www.marybold.com, www.boldproductions.com, College Intern Blog) is not under any circumstances to be regarded as professional, legal, financial, or medical advice. Or education advice. Or marital advice. Or even a tip.

Watching for COBRA or Any Other Kind of Insurance We Can Get Our Hands On

It's not just my interest in health care insurance for Tom and me—it's the awareness that when unemployment goes up 1%, "un-insured" goes up 1.1%. In the coming year or two, that translates to a lot of families who will face difficult decisions about going to the doctor.

COBRA is our current protection against loss of insurance (typically caused by loss of employment) but the costs are legendary. If your former employer paid most of your premium (and most employers do), then you may not even know that COBRA will cost $300 or $400 or $500 (or more) a month. That's for one person. Family coverage starts at about $1000.

In better times, you might not have even known or cared. Losing a job one month, but starting another job the next month, might mean your insurance "bridged" neatly with no uncovered span. Or if a span did occur (we'll pretend it took 3 months to get your next job), you might have relied on COBRA for those 3 months or purchased short-term insurance with a deductible, and not gone broke. Not because the cost was any lower than it is today but because the cost was limited by the time span. If you had some savings (the emergency fund) or you lived on credit cards for a while, you bounced back without any great awareness of the real cost of health insurance.

Short-term COBRA was well tolerated by a lot of the folks who used it. Today, it's not working.

But today a new federal administration begins and the front-burner issues of the economy and unemployment are tied to a back-burner issue of health care. Immediate relief in the form of affordable health insurance is needed. No one knows what that will look like—or how immediate it can be.

Proposals will emerge and it's even possible that in a few hours we will hear a new president's preference. One proposal is to extend COBRA beyond the current 18 month limit or somehow subsidize it so that unemployed workers and families can maintain the insurance they had when employed.

A Medicare-centered proposal would likely take more time to explore and approve. One such plan was proposed yesterday by the California Nurses Association: Medicare for All (Single-Payer) Reform. The plan is cast in terms of a stimulus for the economy, promising 2.6 million new jobs.

I cannot help but read of such plans with other news stories in my head: concierge doctors or, as my local TV station described the concept just yesterday, MDVIP programs. (Another term is boutique medicine.) Would you pay a physician an annual fee of $1500 (separate from your medical billing by her/his office) to insure access and leisurely appointments? Maybe even house calls? In exchange, the physician agrees to carry no more than about 600 patients in her practice. (That's probably a fourth or fifth of the doctor's previous practice.)

Excuse my cynicism, now: will the concierge doctor welcome a Medicare patient? I am certain I am not the first baby boomer to wonder that.

(I am not a critic of concierge medicine, by the way. Last year, when a surgeon gave me his cell phone number—and we even had to call it late at night—I had a taste of having a physician literally on call for you. It could be addictive.)

© 2009 Mary Bold, PhD, CFLE. The content of this blog or related web sites created by Mary Bold (www.marybold.com, www.boldproductions.com, College Intern Blog) is not under any circumstances to be regarded as professional, legal, financial, or medical advice. Or education advice. Or marital advice. Or even a tip.

Hints at Health Care

With no sure plan outlined, there's at least talk of the new administration addressing the length of COBRA eligibility for the newly unemployed. This could be a short- or medium-term solution for folks today while more permanent plans are proposed, debated, and probably debated some more. Even an economy in crisis may not be enough to demand swift action in health care.

COBRA is not necessarily affordable for everyone, of course. There may have to an assortment of short-term strategies to help Americans get/stayed insured. I'm planning a COBRA Watch starting next week.

© 2009 Mary Bold, PhD, CFLE. The content of this blog or related web sites created by Mary Bold (www.marybold.com, www.boldproductions.com, College Intern Blog) is not under any circumstances to be regarded as professional, legal, financial, or medical advice. Or education advice. Or marital advice. Or even a tip.

COBRA Update: Projecting Health Care Bills

In making a choice between COBRA options (following Tom's lay-off), we discovered that the two plans' coverage works out to "a wash" in most scenarios. The plan with a high deductible (and therefore lower premiums) requires more paperwork on the consumer's part but carries the potential of savings if health care bills are low (less than the amount of the deductible of $3000).

Our approach was to try to project health care bills for 2009. Tom phoned his cardiologist's office to see what he could learn. A nurse returned his call to report on what his next visit would involve. Reluctant to name prices, but encouraged by Tom to estimate based on typical charges, she outlined these potential costs: $1000 for the echocardiogram and $2200 for the nuclear stress test.

That amount of detail was enough; no need to estimate labs or any other miscellaneous costs. After the deductible, the two plans and their premiums work out to the same overall benefits, and Tom learned that he will surely exceed the deductible of the lower-premium plan. That means the "regular" plan is the better choice because it is paperwork-free.

So, Tom's individual COBRA cost will be $608/month. The break-down: $545 for medical, $62 for dental.

Tom was lucky in his lay-off in that his COBRA costs were covered "free" by his employer at the start. Not all unemployed workers have that luck and so must pick up their own COBRA premiums immediately. Regardless of the timing, though, one cannot help but compare medical insurance costs with unemployment checks; for Tom, COBRA will now be almost half of the unemployment check. (Obviously, a younger person may see a smaller percentage of the unemployment check needed for medical insurance.)

© 2008 Mary Bold, PhD, CFLE. The content of this blog or related web sites created by Mary Bold (www.marybold.com, www.boldproductions.com, College Intern Blog) is not under any circumstances to be regarded as professional, legal, financial, or medical advice. Or education advice. Or marital advice. Or even a tip.

Another COBRA work-out: Health Insurance for Boomers

We have tackled new COBRA paperwork and... find ourselves only half-done. When Tom was in a lay-off in early 2008, he became eligible for 18 months of extended insurance benefits through COBRA. His employer would pay the first 9 months, and then Tom must pay the next 9 months. That is a lucky circumstance and does not describe all lay-offs.

Lacking information about what the personal cost would be after 9 months, we continued to check out other options for Tom's health insurance, finding them all expensive. So, we were relieved to learn, just last week and a month before the payment would be due, that the next continuation cost is affordable. Tom has two choices: $270 monthly premium with a high deductible, or $550 monthly premium with co-pays similar to his current plan.

We ran comparisons for these scenarios: no health care bills during the 9 months; $3000 in bills; $25,000 in bills; and $50,000 in bills. For all circumstances except "no health care bills" the choice of plan is a wash, no difference. What does cause difference is the amount of paperwork required (more record-keeping with the high deductible plan) and, potentially, prescription drug costs. That will be our comparison point in the coming week, along with an analysis of the dental coverage.

I know this doesn't sound very complex so far but I'm ready to assign the Complexity Scale level of "a work-out" right now, on the basis of the paperwork received:

• White envelope with smallish print, matched by similar presentation on the letter. No opening line of text to identify the packet as crucial paperwork to extend COBRA benefits.
  
• Identification of the employer name was several lines of text after the start of the cover letter so the consumer must recognize the name of the processing company to know that the sender is part of the temporary health insurance coverage.
• Plan options were set as a table with few descriptors. No examples were provided.
  
• Important warnings required complete reading of the packet: consumer must reply within 10 days of the packet being sent (interesting language!) and monthly premiums have no grace period. A late payment equals a canceled policy.
  

© 2008 Mary Bold, PhD, CFLE. The content of this blog or related web sites created by Mary Bold (www.marybold.com, www.boldproductions.com, College Intern Blog) is not under any circumstances to be regarded as professional, legal, financial, or medical advice. Or education advice. Or marital advice. Or even a tip.

a COBRA moment

I said I would report on COBRA processes (extending my health insurance post-retirement for 18 months) and that has to include the ones I mess up.

September was my first month of COBRA. I received the paperwork explaining how to submit the first payment and I did that right away. I digested every word in the packet. There was the dire threat of denial of coverage if I missed a payment. And there was the explanation that if a person receives a retirement payment, then the COBRA premium would be deducted from that payment.

Then, on October 1, I saw the automatic deposit of my retirement check. It was the full amount, which I took to mean that it takes a few weeks for the paperwork to catch up. After all, I didn't even receive my first COBRA information until the 18th of the month.

And then today I had that nagging feeling that I should call the retirement office and ask. After 15 minutes on hold (I was checking), a pleasant young woman checked my records and confirmed that I was unpaid for the current month.

"Your COBRA payment was due on the 1st."

OK, but what about the statement in the paperwork about deduction from my retirement check?

"Oh, yeah, that's not right. Now, if you want to set that up, I can tell you how. Or if you'd like a form to get automatic deduction from your checking account, I can send you that."

Well, I think for now I'll just quickly send in a check.

"Yeah, could you put that in the mail today?"

This young woman was very pleasant and helpful. It was the original paperwork that wasn't. Last month I gave the paperwork a Complexity Rating of 3 out of 10. I was very impressed with it. I now wonder if my Complexity Ratings should be Provisional for 60 days until consequences are evident. (I still take full responsibility: I wasn't paranoid enough.)

About that dire warning of loss of coverage? I figure the rep on the phone was casual (and pleasant and helpful) because I'm still in the 105-day "election period." My reaction? I promptly wrote two checks (for October and November) and got them in the mail.

© 2008 Mary Bold, PhD, CFLE. The content of this blog or related web sites created by Mary Bold (www.marybold.com, www.boldproductions.com, College Intern Blog) is not under any circumstances to be regarded as professional, legal, financial, or medical advice. Or education advice. Or marital advice. Or even a tip.

HIPAA: Health Insurance Portability and Accountability Act

COBRA, bridge with no breaks: COBRA bridges health insurance coverage from old group plan to new group plan, or from old group plan to new individual plan. It may be tempting to forego the bridge, especially if money is tight. Living with no insurance is an obvious risk in terms of immediate health care needs and it also can have long-term consequences for pre-existing conditions when the time comes to sign up for new coverage.

63 days as significant break: Boomers are old enough to remember the horror stories of people denied health coverage because of previous health problems. Our modern plans (nearly all) are covered by HIPAA as well as COBRA, and it's HIPAA that protects us from discriminatory policies or exclusions from coverage. Like most insurance rules we are familiar with, "30 days" has meaning for HIPAA but there's another time line that's important: "63 days." That span constitutes a significant break in coverage—if you go that long without health insurance, your protection from HIPAA is seriously compromised. If there's a gap between coverage (of any sort), the day count matters. So, if you reach the end of COBRA eligibility, don't allow 63 days to pass without replacing it with something, even if that's a short-term individual plan.

Taking precautions: If you use COBRA to the max and stay insured without any breaks, you'll have the best protection against pre-existing health exclusions. Hang onto all "certificates" that prove you have had coverage (insurance providers are required to send you such paperwork) and keep premiums paid. Those are the highlights but the details deserve attention, too. Find them at the Department of Labor's web page on HIPAA, COBRA, and health plan exclusions. (I have found this to be the single best web page for branching out to all these topics. But it is a long read.)

© 2008 Mary Bold, PhD, CFLE. The content of this blog or related web sites created by Mary Bold (www.marybold.com, www.boldproductions.com, College Intern Blog) is not under any circumstances to be regarded as professional, legal, financial, or medical advice. Or education advice. Or marital advice. Or even a tip.

Health Insurance: COBRA and Dependents

Member Only. Because I had no dependents on my benefits while working, my COBRA "election" is for Member Only. Just me. For the past seven years, Tom and I have maintained separate insurance coverage through our employers. But what if Tom needs/wants coverage with me while I am under COBRA coverage?

The Call to the State. This was my only reason for calling my State retirement office regarding COBRA. The paperwork was clear for folks electing coverage for existing dependents, but only mentioned "adding newly acquired dependents" in a general way. I still considered the 10-page packet highly readable and low in complexity; it just didn't answer my specific need about a dependent who might become "newly acquired."

Qualifying Events. Birthing or adopting a child is so much more obvious a case of newly acquired dependent. Getting married, too. But Tom Bold just might be my newly acquired dependent in the future. Will the end of his COBRA coverage be a qualifying event to join me in my COBRA? The State says yes, although the representative first said no and had to be prompted to go check with a supervisor.

At What Cost? At least right now and rounding the dollars for easier reading, the projected cost is for health coverage to increase from $365 (Member Only) to $786 (Member + Spouse). Dental coverage will increase from $23 to $43.

By What Means? To add Tom as a dependent, first a qualifying event must occur. In our case, that would mean his own coverage must end (meaning, end of his lay-off-instigated COBRA). I would have to notify my State office in writing and also provide proof of Tom's insurability. Then, of course, I would also have to send the additional premiums.

Projecting the Need. Because we did not plan 2008 as the Great Transition Year, we are learning about COBRA, private insurance, and retirement in general in a hurry. But I don't think we're unique. I think most boomers hit these transitions with the same level of ignorance that we have. It's not that the information isn't out there, it's that we have to reach our own "teachable moment" for the information to have meaning. So, even though I like planning and projecting, I don't fault myself for not projecting our current needs. I had to get to this point in life to feel the full impact of the information.

© 2008 Mary Bold, PhD, CFLE. The content of this blog or related web sites created by Mary Bold (www.marybold.com, www.boldproductions.com, College Intern Blog) is not under any circumstances to be regarded as professional, legal, financial, or medical advice. Or education advice. Or marital advice. Or even a tip.

Health Insurance: The Saga Begins

Transitions in employment and retirement bring lots of paperwork. Like most boomers, Tom Bold and I give health insurance paperwork top priority. That is introduction to the week. The topic: communications we are receiving about health insurance and COBRA coverage.

Title of a communication received by mail:
CERTIFICATE OF GROUP HEALTH PLAN COVERAGE

The content was not difficult. Three main concepts, paraphrased:

• 1 - This paper proves that you had prior health insurance.
• 2 - This could be important if your next plan excludes some medical conditions.
• 3 - You may have to show it even if your next plan does not exclude anything.

In short, this is a paper I need to hang on to. I know that I'm going to use my COBRA option for a while, but this certificate may be needed after my COBRA coverage ends. The language and content were not problematic. But the presentation required close and repeated reading. So, the complexity of my first communication about my health insurance coverage ranks pretty high, considering it was a one-page letter.

My recommendations back to the State would be:

Readability tip #1. Concerning the title of the communication: never put that many words in ALL CAPS. Full capitalization slows reading by more than 10%. For boomers, I daresay the slow-down is even more. Unfortunately, my State retirement system starts out a lot of communications in ALL CAPS. I had to read the title of this communication several times, and that was after I realized that I had not read it at all when I opened the letter. (ALL CAPS does that to us. Sometimes we skip a line completely.)

Readability tip #2. Never typeset the crucial text of a communication in 8- or 9-point type. I cannot actually say what font the State used. It's that small. Adding to the problem of small text, the width of the text block ran as much as 121 keystrokes. The ideal length is 39 keystrokes. I had to carry the letter into bright light to focus on the very small type. And I had to read the crucial block of text several times in order to catch the full meaning because my eye could not track the line length.

Readability tip #3. Do not use a mono-spaced typeface like Courier. Proportional spacing for characters and sentences helps readers de-code the message. Mono-space typing went out with the typewriters that required it.

© 2008 Mary Bold, PhD, CFLE. The content of this blog or related web sites created by Mary Bold (www.marybold.com, www.boldproductions.com, College Intern Blog) is not under any circumstances to be regarded as professional, legal, financial, or medical advice. Or education advice. Or marital advice. Or even a tip.

Insurance Gap: Retirement to Medicare

Complexity of reading material that the Bolds tackled this week to understand an option for health insurance. For more detail, see bottom of this entry.

Early retirement need for health insurance: For most of us, leaving employment means leaving affordable group health insurance and searching for a replacement policy to span the years to Medicare eligibility (age 65). With Americans favoring early retirement of 62 or even 55, that leaves a big gap in years for health coverage.

Continued employer insurance: The best deal has always been thought to extend coverage with the employer's group policy. So, we were pretty darn excited to receive news that Tom's employer, a large semiconductor company, would start offering "retiree insurance" for those not yet Medicare age. With a start date of October 1, Tom's prospect for affordable coverage looked bright. Even shining.

Groups change, premiums change: For Tom, the best deal may not come with this new offer. With numbers rounded up, his monthly premium would be $1000/month (with $500 annual deductible) or $800/month (with $3700 deductible). Cost for a spouse: additional $750/month.

Comparison shopping: The one plus from learning the figures is that Tom finally has a starting point for comparison shopping. He's still using COBRA from the employer, so there's a window of some months for comparison shopping and final decisions. Cost of understanding this baseline for comparison:
Reading time = 1+ hour
Complexity level = 4
(on scale of 1 to 10, with 10 being mind-boggling).

© 2008 Mary Bold, PhD, CFLE. The content of this blog or related web sites created by Mary Bold (www.marybold.com, www.boldproductions.com, College Intern Blog) is not under any circumstances to be regarded as professional, legal, financial, or medical advice. Or education advice. Or marital advice. Or even a tip.

Health Insurance By State

Diversity among the states. That health insurance is a complex matter goes without saying. Add to the complexity with 51 different versions as documented on Georgetown University's website dedicated to the topic.

healthinsuranceinfo.net is a hard-to-read noun string but once you get to the Georgetown website, the reading becomes easier. Use the clickable map on the homepage to access information by state.

The Georgetown guides do a good job of distinguishing between Group and Individual options. I especially like the site's links to recent press clips, most of which apply to baby boomers. Read below the map for these and other updates from the University's Health Policy Institute.

On a personal note: I will leave my employer's group plan in a few weeks and start COBRA coverage. Tom Bold is already on COBRA but is enjoying paid premiums for a spell. As our COBRA premiums become known to us, I will report on them here. I already have some dissonance: my employer's HR Department told me one thing, the State retirement office told me another thing, and just this week I uncovered text from my original hiring paperwork that presents another COBRA story. I have promised myself that I will keep a log of time spent on health insurance issues. I think a complexity measure is called for, too.

© 2008 Mary Bold, PhD, CFLE. The content of this blog or related web sites created by Mary Bold (www.marybold.com, www.boldproductions.com, College Intern Blog) is not under any circumstances to be regarded as professional, legal, financial, or medical advice. Or education advice. Or marital advice. Or even a tip.

Calling for COBRA

As mentioned previously on this blog (2 July 2008: Working for Benefits), COBRA can serve to extend health insurance when a job ends or bridge to private insurance (at, we hope, group rates). A common misconception—well, make that my misconception—is that there's a COBRA desk somewhere that the newly unemployed must deal with. Actually, it's much simpler than that.

COBRA coverage is literally extended to us from the folks who already have our records. In Tom Bold's case, that's the insurance desk that's been handling his corporate benefits for the past 19 years. For me, it will be the State office that is coordinating all of my paperwork tied to end of employment. This is not to say that we don't have to do anything. We must read the papers, and we must respond with payment when prompted. The point is, the prompts do surface.

COBRA has not enjoyed a good reputation. My image was one of HIGH EXPENSE. And COMPLICATED PAPERWORK. And SCARY TEMPORARY. There is expense, of course. COBRA translates the cost of the group insurance previously enjoyed through employment to a payment the individual must make. Chances are, it will be noticeable increase. Perhaps the corporate package was "free" to the employee, so any change at all seems dramatic. For many, the premium is shared between employee and employer, so shifting to COBRA means the individual must absorb both parts of the payment. And while not unexpected, the shift to payment as opposed to automatic payroll deduction is nevertheless a change. And in a time of many changes, even this logical adjustment adds stress.

As to paperwork, our experience so far has been easy. Admittedly, we have not yet reached the end of COBRA, so we don't know the full story.

SCARY TEMPORARY is the most emotional of the imagery of COBRA. By definition, the coverage is temporary. And with concerns about pre-existing conditions and "insurability," the SCARY part is inevitable.

My strategy has been simple: get on the phone and start calling. And when I didn't like doing that, I asked my daughter to research it. Out of love, or concern, or fear that she might someday be called upon to pay my insurance premiums, she stepped up to the request. We did have to coordinate: I had to speak on the phone first and give the rep permission to discuss my options with my daughter. Clearly, he had done this before.

And that's worth repeating. Researching COBRA was new and daunting for us. We did not have the vocabulary. We hardly knew what questions to ask. But on the other end of the phone, benefits representatives do have the vocabulary. They know exactly what questions we will ask, and they can even tell us what questions we should be asking.

Where to begin? Select the venue that you are most comfortable calling. All of the folks listed here will know where to send you next (and you won't be first person to ever ask about COBRA):

HR - Human Resources
EAP - Employee Assistance Programs
PAYROLL - Payroll office
YOUR BENEFITS PROVIDER -Insurance company (1-800 number on your card)
YOUR RETIREMENT OFFICE - Either on-site or a regional/state office
U.S. DEPARTMENT OF LABOR Employee Benefits Security Administration

© 2008 Mary Bold, PhD, CFLE. The content of this blog or related web sites created by Mary Bold is not under any circumstances to be regarded as professional, legal, or medical advice. Or education advice. Or marital advice. Or even a tip.

Working for Benefits

A recurring theme: Boomer women increasingly report, "I'm working for benefits," which may suggest that they would pursue different work or use of time if it weren't for "the benefits." Those other pursuits can be addressed another time; our topic today is what those benefits are. Typically, the primary need is for health insurance. Mentioned less frequently, at least among the women I talk to, is retirement or pension. (That doesn't mean retirement benefits are less important—just less immediate.)

Why are women working for health insurance? To start, our modern society keeps us notified about the high cost of medical care and imparts a sense of responsibility to be prepared for the worst. It's not something earlier generations had to address, mainly because they didn't live long enough to have the choice. At the last turn of the century, death came at age 40 or 50, if one was long-lived. (The wise old person in the village was honored perhaps mainly for being the only old person in the village.) At the current turn of the century, we predict death at 70 or 80 and even 90 for great numbers of our population.

But boomer women are not 70 yet. They are a decade or more younger and simply planning for a very long rest of life. In terms of health benefits, they see Medicare in the near or distant future. In the meantime, they are working for benefits and almost always mean they are purchasing insurance from an employer's group plan. A boomer woman may be covering just herself, or self plus a dependent such as spouse or child. The great historical change of note: the increasing number of women who are the earner of the benefits (not the dependent on a spouse's plan).

If they weren't working for group benefits: They would either purchase private insurance or go without. There is a middle option referred to short-hand as COBRA, typically uttered with fear and loathing. In fact, COBRA is an extension of group benefits (upon leaving employment) and a potential bridge to converted benefits (moving from group to individual coverage at the same or similar advantaged pricing). Those are good options for the person who has resources on hand to pay for COBRA in transition months. Admittedly, if resources are scarce, COBRA may not provide needed coverage, and more expensive private insurance may be completely beyond reach.

• COBRA: Keeping Your Group Health Insurance
  (Web page - 2006 article by AARP with helpful definitions)
  
• An Employee's Guide to Health Benefits Under COBRA
  (PDF - 2006 reprint by U.S. Government with comprehensive explanations)
  

On a personal note: I remember my longevity moment. I was reading a Gail Sheehy book in which she reported some statistical research: if a woman of my age cohort (people born in the same 10-year period) made it to age 50 without having a cancer, then life span could be estimated at 90 years. That describes me, although I quickly point out that the prediction is actually based on probability. Some of us in my group will reach 90, not all of us.

Will I COBRA: I will probably COBRA this year. In leaving a university position, I have opportunity to continue my group coverage through COBRA for some months. This occurs at the same time that my husband is COBRA-ing. A lay-off package provided him with 9 months extended company-paid group insurance, to be continued through 9 months of COBRA coverage. Our coverage is not coordinated as we each carried separate insurance coverage through employment. The timing is interesting now, as we research the options for each of us. If one of us returns to employment with benefits, then we might return to a earlier pattern of carrying the other as a dependent. If neither of us returns to a company plan, we will have to research the options—and report them here.