Obama's stimulus bill: COBRA is employer paid

[red states rule]

Businesses are going to love this. COBRA is very expensive.




COBRA expansion worries employers
JERRY GEISEL
Stimulus bill item would greatly extend coverage requirement

WASHINGTON—Employers would be required to offer COBRA health care coverage for at least a decade to many former employees and retirees under legislation likely headed for a vote by the full House this week.

The COBRA provisions, embedded in the $825 billion economic stimulus package that cleared by the Ways and Means Committee last week, would be a huge expansion of the COBRA law and saddle employers with health care costs few could have imagined when Congress enacted the health care continuation law in 1986.

Under H.R. 598, employees who stop working as young as age 55 could retain COBRA coverage until becoming eligible for Medicare at 65, regardless of how long they worked for the employer.

In addition, any employee who worked at least 10 years for a company could keep COBRA until eligible for Medicare, an entitlement that could stretch for decades in the case of younger workers.

Current law limits to 18 months the amount of time that individuals can continue health insurance from their former employers by paying a premium that is 102% of the cost of coverage provided to employees.

The House bill also would provide a 65% federal COBRA premium subsidy for individuals who are laid off from Sept. 1, 2008, through Dec. 31, 2009—a provision that has not drawn significant opposition from business groups because it would be only temporary. Beneficiaries' premiums would be subsidized up to 12 months.

http://www.businessinsurance.com/cgi-bin/article.pl?article_id=27010

[PostmodernProphet]

Businesses are going to love this. COBRA is very expensive.




COBRA expansion worries employers
JERRY GEISEL
Stimulus bill item would greatly extend coverage requirement

WASHINGTON—Employers would be required to offer COBRA health care coverage for at least a decade to many former employees and retirees under legislation likely headed for a vote by the full House this week.

The COBRA provisions, embedded in the $825 billion economic stimulus package that cleared by the Ways and Means Committee last week, would be a huge expansion of the COBRA law and saddle employers with health care costs few could have imagined when Congress enacted the health care continuation law in 1986.

Under H.R. 598, employees who stop working as young as age 55 could retain COBRA coverage until becoming eligible for Medicare at 65, regardless of how long they worked for the employer.

In addition, any employee who worked at least 10 years for a company could keep COBRA until eligible for Medicare, an entitlement that could stretch for decades in the case of younger workers.

Current law limits to 18 months the amount of time that individuals can continue health insurance from their former employers by paying a premium that is 102% of the cost of coverage provided to employees.

The House bill also would provide a 65% federal COBRA premium subsidy for individuals who are laid off from Sept. 1, 2008, through Dec. 31, 2009—a provision that has not drawn significant opposition from business groups because it would be only temporary. Beneficiaries' premiums would be subsidized up to 12 months.

http://www.businessinsurance.com/cgi-bin/article.pl?article_id=27010

I am puzzled.....nowhere does the article provide evidence that this is an employer expense.....currently, the law requires the employee to pay for the extended coverage, with taxpayers picking up 65% for a limited time....the stimulus bill extends that limited time......neither requires employer payment....it is taxpayers, not employers that should be concerned.....

[red states rule]

I am puzzled.....nowhere does the article provide evidence that this is an employer expense.....currently, the law requires the employee to pay for the extended coverage, with taxpayers picking up 65% for a limited time....the stimulus bill extends that limited time......neither requires employer payment....it is taxpayers, not employers that should be concerned.....

Here is another link

http://employeebenefits.foxrothschild.com/2009/02/articles/welfare-plans/employer-paid-cobra-subsidies-in-the-economic-stimulus-bill-initial-action-plan/

[DannyR]

From the story:
However, committee member Ginny Brown-Waite, R-Fla., opposed the change and warned that costs of older beneficiaries could be nearly double the premium they pay and saddle employers with thousands of dollars in claims per beneficiary.

The point of COBRA is to offer the same level of health insurance that one enjoyed while employed for a temporary time. As such, the premiums are the same, although the ex-employee pays the companies share along with tax payers.

It seems the feared increased cost comes from the expectation that those insured under COBRA file claims much more frequently than others. Claims have to be made up by increasing premiums across the board, as if you just increase the cost of COBRA members, you pretty much negate the whole purpose of the program.

[red states rule]

From the story:

The point of COBRA is to offer the same level of health insurance that one enjoyed while employed for a temporary time. As such, the premiums are the same, although the ex-employee pays the companies share along with tax payers.

It seems the feared increased cost comes from the expectation that those insured under COBRA file claims much more frequently than others. Claims have to be made up by increasing premiums across the board, as if you just increase the cost of COBRA members, you pretty much negate the whole purpose of the program.

It is exactly according to liberal doctrine.

You can't make everybody rich, so what you do is drag everybody down to the lowest common denominator, or at least try to. Make those evil darn business owners who employ most Americans struggle too.

[PostmodernProphet]

Here is another link

http://employeebenefits.foxrothschild.com/2009/02/articles/welfare-plans/employer-paid-cobra-subsidies-in-the-economic-stimulus-bill-initial-action-plan/

obviously one link or the other is wrong....one says the government is paying the 65% subsidy, the other says the employers are.....

[Mr. P]

The writing on the wall is...companies will NO LONGER offer insurance at all to avoid this burden. The Gov is good at drivin things down when they stick their fingers into the private sector.

[red states rule]

How will employers know if the former employee got a new job and is just letting the US taxp[ayer continue to subsidize his healthcare by 65%?

I see a huge scam coming

[DannyR]

How will employers know if the former employee got a new job and is just letting the US taxpayer continue to subsidize his healthcare by 65%?
I see a huge scam comingSeriously? Given the huge cost former employees have to dish out under COBRA, they'd be idiots to continue coverage past the point they found a new job. Its NOT a bargain for most people.


obviously one link or the other is wrong....one says the government is paying the 65% subsidy, the other says the employers areEmployers do not pay it. They don't even have to worry about administration costs, as this too must be paid by ex-employees.

But they do incur increased costs. This bit I found on the web explains why pretty clearly:
Currently, COBRA laws require employers with more than 20 workers to allow former employees to retain their health insurance for up to 18 months. The worker pays the full COBRA premium and a 2% administrative fee. Most employers outsource COBRA administration to a third-party vendor.

Benefits industry watchers explain that, although the government and the employee are footing the COBRA premiums, the worker still remains part of the employer's group health plan, which means that claims incurred by that individual could have an effect on the group's premium rates down the road.

Employees who are laid off and are facing serious medical conditions are more likely to select COBRA because they cannot afford to lose health care coverage, explains Lenny Sanicola, practice leader for benefits in the professional development department of WorldatWork, a trade association for HR professionals.

"Whereas, healthier employees might say 'My family and I are healthy, and we are going to ride out the hard times, given that we can't afford to pay for COBRA coverage because of our current financial situation,'" says Sanicola.

The HR Policy Association, a Washington, D.C.-based trade group, reports that COBRA enrollees cost on average 145% as much to cover as active employees, and the COBRA costs for older workers aged 55 to 64 tend to be even higher, averaging about 185% of premiums paid.

[red states rule]

Seriously? Given the huge cost former employees have to dish out under COBRA, they'd be idiots to continue coverage past the point they found a new job. Its NOT a bargain for most people.



Of course, with ideas like this from Obama, those companies will not be around for long anyway

[PostmodernProphet]

Employers do not pay it. They don't even have to worry about administration costs, as this too must be paid by ex-employees.


this of course ignores the fact that both links clearly state that there is a subsidy of 65% to the ex-employee that has to be paid by someone.....

[DannyR]

this of course ignores the fact that both links clearly state that there is a subsidy of 65% to the ex-employee that has to be paid by someone.....The government, not the employer pays that subsidy. The change in law extends the amount of time they pay it. See my note above on exactly where employers get hit in increased costs. The increase is real, but its not due to the subsidy.

[Kathianne]

I am puzzled.....nowhere does the article provide evidence that this is an employer expense.....currently, the law requires the employee to pay for the extended coverage, with taxpayers picking up 65% for a limited time....the stimulus bill extends that limited time......neither requires employer payment....it is taxpayers, not employers that should be concerned.....

I have to agree. When I finally was granted my divorce, COBRA kicked in for 18 months. I paid $300 per month, for just myself, with a $1000 deductible, and that was in 1995.

[Immanuel]

The writing on the wall is...companies will NO LONGER offer insurance at all to avoid this burden. The Gov is good at drivin things down when they stick their fingers into the private sector.

Ain't that the truth!

One thing about COBRA is that most middle class and below wage earner simply could never, ever conceive of maintaining coverage during a period of unemployment. The entire idea is foolhardy because the only people that can maintain coverage are those who are extremely sick when they lose their jobs and they have no other choice but to pay it or pay hospital bills. That fact in itself drives up the cost of health insurance for employers because insurance companies have to cover those expenses as well.

Immie