To help, or not to help: what’s it gonna be?
I am compelled to post a message regarding the COBRA Health Insurance Continuation Premium Subsidy provided by the American Recovery and Reinvestment Act (ARRA) of 2009. I am concerned that the subsidy that provides for a reduction in COBRA premiums is being applied too slowly by some health insurance companies. Subsequently, those who are eligible may still not see a reduction in COBRA premiums if they become involuntarily unemployed.
The Internal Revenue Service web site provides the following information for employees or former employees:
Workers who have lost their jobs may qualify for a 65 percent subsidy for COBRA continuation premiums for themselves and their families for up to nine months.
Eligible workers will have to pay 35 percent of the premium to their former employers.
To qualify, a worker must have been involuntarily separated between Sept. 1, 2008, and Dec. 31, 2009. Workers who lost their jobs between Sept. 1, 2008, and enactment, but failed to initially elect COBRA because it was unaffordable, get an additional 60 days to elect COBRA and receive the subsidy.
This subsidy phases out for individuals whose modified adjusted gross income exceeds $125,000, or $250,000 for those filing joint returns. Taxpayers with modified adjusted gross income exceeding $145,000, or $290,000 for those filing joint returns, do not qualify for the subsidy.
On 3/27, I was layed off from work. I then received an email from the former employer advising me that I may be eligible for the COBRA premium subsidy. They have since provided proof of my eligibility to Neighborhood Health (A UnitedHealthcare Company) who, in turn, has acknowledged receipt of such documentation. However, I have yet to see a reduction in premium after three months.
I’ve been invoiced by Neighborhood Health and paid the full amount (that is, with no reduction in premium) for the months of April, May and June. To date, Neighborhood Health has not been able to provide any indication of how soon they will start to bill anyone based on the reduced rate. In other words, if I need to maintain COBRA coverage, I may have to pay 100% as opposed to 35% of the premium until which time Neighborhood Health completes whatever bureaucratic process they’ve established.
To make matters worse, I was told by one government agency (the agency name escapes me now) that there might not be any stipulation that health insurance companies apply premium reductions within a certain period of time. In other words, I can maintain coverage under COBRA as long as I am eligible, but may never be billed at the reduced rate.
Neighborhood Health has advised me that, when they process eligible claims, a credit for the additional premium paid will be applied if coverage is continued. Otherwise, a refund will be issued accordingly.
On 7/14, I submitted a request for discontinuation of COBRA coverage to Neighborhood Health effective 6/30. Once again, Neighborhood Health confirms having received all documentation required in order for me to receive a premium reduction. Unfortunately, Neighborhood Health also indicates that a refund of the excess payment will not be issued until September. On 9/14, I contacted Neighborhood Health again and they informed me that a check will be sent within three weeks.
I am extremely thankful that the American Recovery and Reinvestment Act (ARRA) of 2009 exists; however, it concerns me that eligible persons may need the premium reduction immediately, not six months later as is the case for me. ARRA was enacted to help people, but I, personally, have yet to see it.
You can draw your own conclusions about the effectiveness of the COBRA Health Insurance Continuation Premium Subsidy provided by the American Recovery and Reinvestment Act (ARRA) of 2009.
I have forwarded a copy of this post to Secretary of Labor, Hilda L. Solis, and the Secretary of the Department of Health and Human Services, Kathleen Sebelius.
Comments welcome!
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I wanted to respond to your posting as I believe this may be an issue for many individuals in your shoes expecially in today’s economy.
I am a benefit administrator for a company and am dealing with individuals on COBRA. Luckily for our individuals I am the one to administer the cobra so our company gets to wait for the reimbursement quarterly from the governement.
I will let you know that as long as you have documentation that you qualify for the subsidy, that the company you worked for supplies COBRA (some have to some don’t but still do like my company) then you will receive payment back from the insurance company. They are required by law to reimburse you the 65% of the premium over payment or apply the over payments to future premiums.
I also wanted to let you know that companies whether it be an insurance company/provider or your previous employer, only has until the end of 2010 to claim the credit from teh government. Regardless of if they submit their claim to the government, you are entitled to your 65%.
I suggest calling your insurance provider and explaining to them that you have been paying the 100% and then indicate to them if you would like to have a credit on your account (if you do this make sure they send you a statement detailing out your credit. Double check it to make sure they calculated everything correctly.) or a reimbursement check.
Good luck!