Four Stimulus Breaks Due To Run Out At End Of Year

Some of these programs will be renewed. Some won't. It's hard to know at this point which one's will and which ones won't.

-- Cobra subsidy: Workers who are terminated between Sept. 1, 2008, and Dec. 31, 2009, and are eligible to stay in their group health plan at their own expense under the law known as Cobra can get the government to pay 65 percent of their premium for up to nine months, as long as they are not eligible for Medicare or any other group health plan.
People who started getting the subsidy when it became available March 1 run out after November. People who are still getting the subsidy at year end can continue until it's used up. But people who get laid off after Dec. 31 won't get any subsidy.

What happens with the Cobra program probably depends on what happens with the health care reform bill. A defeat of the health care bill probably means that the Cobra program will be extended.

-- Home-buyer credit: People who buy a home to live in before Dec. 1 and have not owned a home in the past three years can get a tax credit up to $8,000. The credit phases out for higher-income people. To qualify, you must close by Nov. 30.

There is a proposal to expand this program and make it permanent, but that makes little sense. The idea of the program is to stimulate buying. Making the program permanent would mean that people would no longer be in any rush to buy.
Of course common sense never stopped Congress from doing something.

-- Unemployment: The stimulus act increased the weekly unemployment benefit by $25 per week, allowed people to deduct up to $2,400 in benefits on their federal tax return and extended the federal government's extended benefits program, which provides additional compensation to people who have used up their regular state benefits.
In California, a person who exhausted 26 weeks of state benefits could get up to 20 more weeks under the first federal extension, then up to 13 weeks under a second extension and up to 20 weeks more under a third extension. The first and second extensions were supposed to expire in the spring but the stimulus extended them until Dec. 31. The stimulus also provided 100 percent federal funding for the third extension.
All these federal benefits sunset after Dec. 31. A person who was already receiving extended benefits on Jan. 1 could finish that round of benefits, but not start the next extension. A person who was still receiving their regular state benefits on Jan. 1 would get no extended benefits.

This program is the one most likely to be extended. Proposals are already in place to do so, although many people will probably run out of benefits before that happens.

-- New-car deduction: If you buy a new vehicle between Feb. 17 and Dec. 31 of this year, you can deduct the sales tax on up to $49,500 of the purchase price on your federal tax return. The deduction phases out for higher-income taxpayers. This incentive got overshadowed by Cash for Clunkers.

This one is likely to expire.

Subject Meta: 

Forum Categories: 

COBRA

I've always considered COBRA to be one of those "for show only" programs and should be significantly modified.

i.e. a person is laid off and then they have the "option" to pay the premiums to continue their employer based health insurance.....but....those premiums are usually more than rent and the house payment.

So, unless employers are forced to pay those premiums when laying off workers or, those premiums are scaled to actual income coming in or something...

I honestly don't see the benefit (although I don't know the statistics, I'm writing this comment from general knowledge) since few can afford the original COBRA premiums in the first place.

I don't know who sets those premium amounts but if it's the employers....then clearly it's for show...no way they are paying $2k a month for example in health insurance premiums per an individual, at least from some of the scaled back benefits I've seen.

I'm unsure of the tax credit. I mean if it's gone, do home prices keep dropping to align with actual wages? What a damned if you do, damned if you don't. If prices aligned with wages, that is great for future home owners....but of course decimates the #1 wealth value for those who already own homes. Keep the prices up, new home buyers cannot really afford them because they are overpriced in comparison to wages.

I think the median home price in the CA bay area is still half a million dollars. Even when $150k base salary that is one rough ride and if you lose your job, which is very common in disposable worker Silicon valley...you are completely screwed.

In NYC area, it's like the "busing" system....poor people are bussed in to work for the rich folk...then bussed out to go live elsewhere...
seriously, who could possibly afford even a closet in that entire area even when pulling $150k/yr?

You must have Javascript enabled to use this form.

The Cobra program

Speaking from someone who's been unemployed for a while, I wouldn't have bought into the Cobra program if not for the fact that 65% of it was being subsidized.
Only having to pay $140 a month, instead of about $400 a month, makes a huge difference.

You must have Javascript enabled to use this form.

that's temp & new correct?

As far as I know UI never subsidized COBRA until now right?

I'm self employed so I've never collected UI....me, if I get screwed....I am screwed.

$400/month sounds pretty cheap, it seems I've seen, for individuals who are still in the 30's and so on, it's been like $1200/$1600 month.

Still, on UI, it doesn't matter if you're paying that out of pocket!

Which is another point...nowadays with throwaway workers...
basically people "save up" to use that savings to keep themselves from being homeless while trying to get another job.

When I put together this week's FNV, it is astounding to see the labor battles of earlier days and see how now those things even being fought for are so long gone, we're back to 1890's, 1905, etc. time frame just arguing to get subsistence pay....i.e. just any job.

You must have Javascript enabled to use this form.

COBRA more Hiss than help

I have to agree with Robert Oak's comment that COBRA is little more than an attempt to say "we did something", because of the serious costs that people would incur in trying to continue paying even a portion of their health insurance. In some locations where employees are not laid off but have been "temporarily laid off", their health benefits have been retained until they are again fully employed or move on to a new employer.

This seems like a far more reasonable manner of operating that really protects those who have lost their work from financial disaster caused by illness. Of course, this would require having employers accountable for their employees well being in a way that would be "inconvenient" for too many businesses.

You must have Javascript enabled to use this form.

Point of information - please excuse me

COBRA allows certain employees to continue health care coverage at the group rate for certain period of time - 18 months. The group rate doesn't include the portion that employers typically pay. So, if the group premium rate is $1200 per month, but would be less to an active employee because of employers contribution, the former employee pays the full $1200.

The stimulus plan, which this story points out is temporary, called for a gov't to pay for a portion of the group rate. COBRA is NOT a great deal - the group rate is a huge chunk of change particularly for a person w/family to support and bills to pay.

But what happens if the employer ceases operations - COBRA doesn't matter because the health care plan ceased to operate with the company.

RebelCapitalist.com - Financial Information for the Rest of Us.

You must have Javascript enabled to use this form.

right but what I have a hard time believing

considering some of the skimpy coverage, the employer is really paying $1200/month per individual employee (I'm ignoring dependents). That seems beyond belief high when one isn't getting vision, dental and have a high deductible.

Not that I don't believe insurance companies are screwing employers as well as small business/individuals.

You must have Javascript enabled to use this form.

That $1200/month example is from actual case.

That is what a recently unemployed family member (w/dependents) was offered under COBRA. The stimulus is helping for the time being but when it runs out before the person gets a job that person and dependents will join the ranks of the uninsured.

Now, there is no question that employers may be tacking on some "mark-up" on the premiums but that is what has been offered - nothing illegal for employer to "mark-up" premium especially under the guise of "administrative costs".

RebelCapitalist.com - Financial Information for the Rest of Us.

You must have Javascript enabled to use this form.

Slightly off topic but WTH

One of the things i don't understand is why didn't the Obama Administration explain to people who our current employer sponsored health care system is unstable.

A huge number of people who are insured receive their coverage through employer. What happens when that employer: a) eliminates coverage because it is too costly; b) goes bankrupt or ceases operations; c) worker or dependent has pre-existing condition; d) employer shifts more and more premium costs to workers w/out corresponding increase in actual wages/salary?

Workers are SCREWED. I think people would understand that but fail to realize it now.

RebelCapitalist.com - Financial Information for the Rest of Us.

You must have Javascript enabled to use this form.

as far as I know

They are not separating out the employer from the coverage...

then frankly I do not trust Wyden. He has a proposal to separate out health insurance from employers, but he is just so corrupt (kind of that corporate liberal level) I just don't listen to much he has to say.

But, yes that's clearly a problem, varies greatly and also contributes to age discrimination. They perceive older workers as costing more, often due to health insurance.

i.e. you can work at a large corporation and have great coverage, a mid-size, skimpy coverage...
and a startup....that's the pray you don't get sick plan.

You must have Javascript enabled to use this form.

For What It's Worth.

Some people love him, and others do not. I happen to think that Matt Taibbi is one of the few authentic investigative journalists left out there.

Anyway, some time ago, Rolling Stone put Taibbi on assignment to write a comprehensive piece on "health care reform", whatever it is. His report appeared in the September 3rd print edition and is now available online at this link.

I read the article earlier today and it enraged and disgusted me, but it did not surprise me. The process of corruption involved in the evolution of this "reform" measure to date is diligently exposed by Taibbi. Bottom line, we will end up with some legislation that will give even more opportunites to the healthcare insurance industry to rip off the average citizen. Here's Taibbi's concluding paragraphs:

All that's left of health care reform is a collection of piece-of-shit, weakling proposals that are preposterously expensive and contain almost nothing meaningful — and that set of proposals, meanwhile, is being negotiated down even further by the endlessly negating Group of Six. It is a fight to the finish now between Really Bad and Even Worse. And it's virtually guaranteed to sour the public on reform efforts for years to come.

"They'll pass some weak, mediocre plan that breaks the bank and even in the best analysis leaves 37 million people uninsured," says Mokhiber, one of the single-payer activists arrested by Baucus. "It's going to give universal health care a bad name."

It's a joke, the whole thing, a parody of Solomonic governance. By the time all the various bills are combined, health care will be a baby not split in half but in fourths and eighths and fractions of eighths. It's what happens when a government accustomed to dealing on the level of perception tries to take on a profound emergency that exists in reality. No matter how hard Congress may try, though, it simply is not possible to paper over a crisis this vast.

Then again, some of the blame has to go to all of us. It's more than a little conspicuous that the same electorate that poured its heart out last year for the Hallmark-card story line of the Obama campaign has not been seen much in this health care debate. The handful of legislators — the Weiners, Kuciniches, Wydens and Sanderses — who are fighting for something real should be doing so with armies at their back. Instead, all the noise is being made on the other side. Not so stupid after all — they, at least, understand that politics is a fight that does not end with the wearing of a T-shirt in November.

This is at the end of 7 long online pages that are written in an informative and entertaining way; the inimitable Taibbi style. Read the whole article, it is well worth the time. But make no mistake, the US Gov't. is not interested in looking out for the average American, in any way, shape or form. We are the krill for the predator whales.

You must have Javascript enabled to use this form.

Yardstick

The Federal Employee Health Benefit Plan (FEHBP) -- the one members of congress and other feds have -- allows its members to switch carriers once a year. I think the $1,200/month figure (maybe a little higher for the Blues which have the lion's share of enrollees) is pretty close to cost, with employees paying in about a third and employer paying the rest. As I recall, the Blue Cross standard option does not have much dental (basic x-ray and prophylaxis benefit, and some paltry amounts by procedure) -- vision and dental coverage are separate policies at about $35/mo per person (cost to employee), with benefit limits depending on plan. Now, many of those covered do not meet their deductibles until late in the year, but the real advantage is cost control -- rates have been negotiated and the cost bite is not so painful. For example, try going to an ER without coverage and it can land some in the poorhouse. An ER physician may bill $600 or so to an uninsured patient, vs. perhaps less than $100 to the Blues, so you only get hit with the co-pay, and maybe no co-pay under certain circumstances. All these disparities are understandable, but could be managed much better without driving doctors (or patients) crazy.
Frank T.

You must have Javascript enabled to use this form.

Frank T.

What about now?

The stimulus contained about $55 billion for funding for state governments to keep teachers on the payroll and other educational expenses. I'm expecting the Republicans to win the House and thus there will be no more extensions of any parts of the stimulus, so how many layoffs do you think there will be on the state level if the the stimulus funds start to run out by the end of this year?

- Slon

You must have Javascript enabled to use this form.