With so many people unemployed because of the state of the American economy, COBRA is an oft-heard term. But what are COBRA benefits, and how do they work? This week’s Friday Filmstrip from StaySmart/StayHealthy, via YouTube, explains it:
It was reported on Wednesday that the United States Senate voted 62-36 to approve a $138 billion bill that temporarily halts cuts in Medicare payments to doctors, and also extends COBRA premium subsidies and Medicaid assistance.
Senate Majority Leader Harry Reid (D – NV) said in a statement to the press, “This week’s bill helps those who have been hit the hardest. Among other things, we’re going to extend unemployment benefits to those looking for work, cut taxes for families and businesses, and protect Medicaid so low-income families can afford healthcare.”
Specifically this new bill will postpone a 21% cut in Medicare physician payments until October 1, 2010, though physician groups are still hoping that Congress will offer a more permanent solution to Medicare’s sustainable growth-rate (SGR) formula, which is based on the health of the economy at any given moment. Payment cuts to doctors have been looming since 2003. This SGR measure is likely to cost almost $7.5 billion between now and 2020.
In addition, the bill contains a six-month extension of additional federal financial aid to the state Medicaid programs, and extends COBRA and unemployment insurance benefits through the end of this year.
The bill is not unopposed. Naysayers argue that it isn’t fully offset, and will add more than $100 billion to the federal deficit over the next ten years. Senator George LeMieux (R – FL) said during floor debate that while some of the programs in question may be good for the states in the immediate future, “…at some point a senator has to stand up and say … no more bankrupting the country.”
With Senate approval, the bill has now been sent back to the House of Representatives, which already passed an earlier version of it. As of close of business on Wednesday, it was still uncertain whether there would be a conference between the Senate and House, or if the House would simply vote on the bill as altered by the Senate, before passing it along to the President.
Earlier this week, the U.S. Senate passed legislation that included an extension for the federal flood insurance program until the 28th of March. The extension means that the NFIP (National Flood Insurance Program) can once again issue new policies, something it hasn’t been able to do since its authorization expired at midnight last Friday. The issuing of new and renewal policies has now resumed.
Brad Carroll, press secretary with FEMA, said in a statement, “This reauthorization allows for policies to continue to be issued and renewed. Individuals who were seeking to renew their policies or purchase a new policy during the brief period between February 28 and March 2, when the NFIP was not reauthorized, may now proceed with their purchase. Existing policies were not impacted by the brief lapse in Congressional authorization and continue uninterrupted.”
On February 26, the NFIP had issued a memo that included guidelines for operations during a hiatus, but the several-day hiatus that followed almost immediately did not affect any claims payouts.
Other programs reauthorized through this emergency legislation include COBRA benefits and unemployment insurance.
The National Flood Insurance Program currently covers about 5 million people.
Last week, the United States Senate failed to vote on several bills meant to extend federal programs including unemployment, COBRA, flood insurance, and transportation project funding, before their expiration dates on Sunday, February 28th. Why? Because one senator, Jim Bunning (R-KY) has concerns enough about how to pay for such programs, that he’s blocked final approval of any of them.
The result of this is that all of those programs could be in political limbo for a week or so, until the Senate finds away to either approve the extensions without Bunning, or assuage his worries. Practically, this means that – for example – the National Flood Insurance Program (NFIP) will not be able to issue any new policies, approve renewals, or increase coverage amounts, until reauthorization has been approved by Congress.
Senator Bunning maintains that Congress has not met the requirement of paying for the requested extensions, either via new funding or budget cuts. He says he does support the extensions, but feels funding should be clear before they’re approved. Mr. Bunning is not seeking re-election after his current term ends.
On the Senate floor, Bunning said, “The only difference I have, and some of my good friends from the other side of the aisle, is that I believe we should pay for it. There is a right over the last three years of the Democratically controlled Congress. We have run up $5 trillion in debt. There has to be a time to stop that.”
In response, Senate Majority Leader Harry Reid vowed that the extension measures would pass by week’s end, but he also criticized the Republican senator’s delay tactics, explaining, “We talk a lot about Senate procedure in our debates, and that’s often appropriate. But it’s also often complex. The catch here is that these benefits do not need to expire. We have the ability right now to extend them for just a short time until we work out a longer-term solution. It is irresponsible not to. It is immoral.”
If the extension measures are approved, flood insurance would only be extended through March 28th of this year – just a month. There have already been other short-term extensions within the past year.
The United States House of Representatives has already approved the flood insurance extension.
If you’re currently using the existence of COBRA health insurance law to maintain insurance coverage after you’ve been laid off or fired, you’ll be glad to know that Congress ended weeks of uncertainty in late December, giving final approval to President Obama to sign into law a Department of Defense bill that included provisions to extend COBRA premium subsidies.
According to an article at BusinessInsurance.com, the measure, H.R. 3326, extended a 65% premium subsidy, originally established via an economic stimulus measure passed early in 2009, by six to fifteen months for employees who were “involuntarily terminated” from their jobs between September 1, 2008 and December 31, 2009. In addition, any workers who lose their jobs before February 28, 2010 will also be eligible for a 15-month subsidy. Without the extension, employees terminated after December 31st, 2009 would not have been eligible.
The extension of the subsidy is expected to offer significant financial relief to employees who lose their jobs and group health insurance during the first two months of this year, as well as the many workers who have already collected the subsidy for the past nine months, and were no longer eligible or were about to lose their eligibility to receive it.
Representative Joe Sestak (D – Pennsylvania) said in a statement to the press, “Losing one job’s is difficult enough. But losing one’s health care along with it and worrying about being able to get treatment for oneself and one’s family, or fearing bankruptcy in the event of injury or illness is something Americans should not have to cope with in this difficult time.” Sestak had previously introduced a COBRA premium subsidy extension measure, part of which was included in the military spending bill passed in December.
This new COBRA subsidy extension may not be the last such extension, however, especially if unemployment numbers continue to remain high. While statistics on how many laid-off employees are taking the subsidy is not available, a congressional Joint Committee on Taxation report, generated after approval of the original subsidy, contained estimates that about 7 million workers and their families would benefit, at a total cost of $25 billion. Another survey found that COBRA enrollment rates surged after the creation of the subsidy, with opt-in rates nearly doubling as a result.
From September 1, 2008 – February 28, 2009, roughly 19% of involuntarily terminated employees were enrolled in COBRA. In contrast, from March 1, 2009 when the subsidy became available, through November 30, 2009, the original expiration date, enrollment rates were averaging about 39%.
The subsidy reduces insurance premiums from roughly $400 (for an individual) to $1200 (for a family) to $260 (for an individual) to $780 (for a family) – a significant savings for people who no longer have a regular source of income.