Obamas COBRA Subsidy

[djs]

A couple of references from http://www.wordandbrown.com/inbox/newsletters/ComplianceFlashAmericanRecoveryReinvestmentAct.pdf

Income Limitations
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Individuals with modified adjusted gross income that exceeds $250,000 (for joint return filers) or $125,000 (for all other filers) are not
eligible for the full premium subsidy. However, they may be eligible for a portion of the subsidy. Individuals earning between $125,000
and $145,000 (between $250,000 and $290,000 for joint return filers) will have their income tax increased by a percentage of their total
COBRA subsidy received in that year. Individuals earning more than $145,000 ($290,000 for joint return filers) will have their income tax​

increased by the total amount of COBRA subsidy they receive.

As far as other coverage being offered, it appears becoming eligible for another group plan stops the subsidy.

Assistance Eligible Individuals are entitled to receive the subsidy for up to nine months. However, if an AEI becomes eligible for other
group health coverage or Medicare, or reaches the end of his or her maximum COBRA coverage period, his or her entitlement to the
subsidy ends. Any AEI who becomes eligible for other group health coverage or Medicare must provide timely written notice that he or she
no longer qualifies for the COBRA subsidy. Failure to do so is punishable by a penalty equal to 110 percent of the subsidy received after becoming eligible for other coverage.​

If you get 'involuntarily seperated now, none of this applies:

Subsidy Eligibility
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Qualified beneficiaries that experienced an involuntary termination of employment and subsequently elected COBRA continuation coverage
on or after September 1, 2008, but prior to February 17, 2009 (the “Enactment Date”), are eligible to receive the subsidy on a go-forward basis beginning on the enactment date.​

Also, there is no money involved (huh??? explain that!). The employer pays the bill, and applies the 65% of the payment for the eligible ex-employee towards payroll taxes. Not sure what happens if you don't have enough payroll taxes.

The big problem is you can't 'double-click' on anything. There don't seem to be the answers when you try to look at a particular individuals case and how it works. Answers are coming though....

The Act requires the Department of Labor, Treasury, and the Department of Health and Human Services to work together to provide a
model notice within 30 days of the enactment date. Because employers have a 60-day period in which to provide the revised notices, some employers may choose to wait until the model notices have been issued before revising their own notices.​

I personally read the stimulus bill which stimulated this change. The only thing I figured out is if you finalize a divorce at the end of the period, at least one person is eligible to continue on cobra / subsidy (perhaps, not clear) for another 24 months. Not bad since it is a 9 month program. The rest of the bill is incomprehensible, you need other documents to understand what is being inserted and where, what gets struck, and then I got to imagine reading it is almost impossible.

Assistance Eligible Individuals are entitled to receive the subsidy for up to nine months.

Good luck! People will make this out to be something it's not. I'm not worried about my cobra, I'm just hoping i don't have to make my mortgage payment this month. Unfortunately, I may not qualify to have all of you chip in to make my payment for me.

By the way, why does all of this have an income test? Why shouldn't these benefits be available to those who are stuck paying for it?

Dan

 

[motoxxx]

Don't ya just love how the government can get right in there and "simplify" everything like this?

Man, it blows me away that they can actually present stuff like this and seriously believe that it is better than the current system. I guess I shouldn't really expect anything different from a President that was arrogant enough to write two books about himself but never was active enough to write a single piece of legislation.

I wonder really how far down all of this crap is going to go.

 

[arnguy]

Good post, Dan. I understand that the DOL and IRS have posted some information on their websites, but I think everyone is holding their collective breath until the details come out. Remember the old adage, "The devil is in the details." It does appears as though this may be an opportunity to offer STM to the eligibles while awaiting the COBRA subsidisdized plan. I don't think that STM would affect the eligibility. Any thoughts?

 

[djs]

Thoughts??? I have lots of them. Any real knowledge.... not so much.

If I read correctly, individual coverage will have no impact on returning to cobra. In this case, obviously STM wouldn't have an impact. Can't say for sure though, be nice if there was a bit of clarity.

Dan