Emergency Funds - do you figure-in COBRA?

[NY Disney fan]

I'm trying to save 12 months of an Emergency Fund, that includes COBRA. How come the finance writers don't stress this? How much does one need to save in their EF AND included medical insurance? What have you done?

 

[mrudman]

In our case, I'm not planning on including medical insurance at all (when I get to the point where I'm building an EF, lol.. I'm still at DR's baby step #2 - paying off our 2nd car.. but we are also accomplishing step #4 as well at this point).

My reasoning why I'm not going to include it in the emergency fund is because both DH and I are employed, making approximately the same income.. at this point he is covering all of us under his employer.. but if he were the one to lose his job, I can pick up medical insurance for all of us through my employer for about $50 more per month.

 

[Pakey]

I have to include it. My husband is self employed and makes about 1/4th of what I do. The insurance is carried through my job. If I were to lose my job, I'd have to COBRA at $1600.00/month, which is more than any other bill we would have to pay. Going without insurance is not an option for me (battling cancer) so my emergency fund definitely has to factor that cost into it.

 

[Pakey]

In our case, I'm not planning on including medical insurance at all (when I get to the point where I'm building an EF, lol.. I'm still at DR's baby step #2 - paying off our 2nd car.. but we are also accomplishing step #4 as well at this point).

My reasoning why I'm not going to include it in the emergency fund is because both DH and I are employed, making approximately the same income.. at this point he is covering all of us under his employer.. but if he were the one to lose his job, I can pick up medical insurance for all of us through my employer for about $50 more per month.

Most insurance companies have open enrollment periods and that is the only time you can add dependents unless there is a qualifying event (like marriage, adoption, birth). So if your husband was to lose his job, you could still be without insurance until the open enrollment period at your place of business. At our company, July is our enrollment month. We've, unfortunately, had to inform some of our employees, about this when they thought they could just add at any time. Insurance companies do not consider loss of other coverage as a qualifying event.

 

[mrudman]

Most insurance companies have open enrollment periods and that is the only time you can add dependents unless there is a qualifying event (like marriage, adoption, birth). So if your husband was to lose his job, you could still be without insurance until the open enrollment period at your place of business. At our company, July is our enrollment month. We've, unfortunately, had to inform some of our employees, about this when they thought they could just add at any time. Insurance companies do not consider loss of other coverage as a qualifying event.

You're right, there is always the open enrollment period (December in my case).. but my job has a policy that if you are covered by your spouse, and he/she cannot cover you any more (such as job loss), then you can pick it up at that point.

 

[JennG]

You're right, there is always the open enrollment period (December in my case).. but my job has a policy that if you are covered by your spouse, and he/she cannot cover you any more (such as job loss), then you can pick it up at that point.

Mine is the same way. Definitely most helpful particularly in today's environment.

 

[anotherdismom]

Most insurance companies have open enrollment periods and that is the only time you can add dependents unless there is a qualifying event (like marriage, adoption, birth). So if your husband was to lose his job, you could still be without insurance until the open enrollment period at your place of business. At our company, July is our enrollment month. We've, unfortunately, had to inform some of our employees, about this when they thought they could just add at any time. Insurance companies do not consider loss of other coverage as a qualifying event.

It may vary state to state, but I'm pretty sure that here in WA, loss of employment is considered a qualifying event. I'm sure the insurance companies don't like it, but they don't have a choice.

 

[ilovemk76]

I'm trying to save 12 months of an Emergency Fund, that includes COBRA. How come the finance writers don't stress this? How much does one need to save in their EF AND included medical insurance? What have you done?

We include health insurance in our EF.

 

[puffkin]

My reasoning why I'm not going to include it in the emergency fund is because both DH and I are employed, making approximately the same income.. at this point he is covering all of us under his employer.. but if he were the one to lose his job, I can pick up medical insurance for all of us through my employer for about $50 more per month.

You may want to rething that reasoning......

Both DH and I work Full Time. I am a CPA, DH works for a petroleum carrier. I do make more money, but not a whole lot more. I lost my job through a firm merger 2 years ago (June 2009). DH then picked up insurance for us. There was NOTHING out there paying over $10 an hour (which is unfeasible for us with daycare costs). That Sept I ended up taking a long term temp job in the meantime while continuing to look for a perm job.

DH was then laid off in February. So there went our insurance. Our options were $1600 Cobra. Temp job only offered insurance for me and it was more than Cobra. In April my temp job ended so we were both unemployed. We are the people who never thought this could happen to us (especially in my field, which is in pretty high demand even now). We both have strong work histories, education, experience. It was just the perfect storm.

We lived like that until September of 2010 when I finally got a FT position (at a pretty large paycut and with an hour commute) but at least I could pick up insurance for us. DH finally found a job in December so we are both now working.

We are slowly working on building an emergency fund. Because we are proof that it can happen!

 

[NY Disney fan]

DH was then laid off in February. So there went our insurance. Our options were $1600 Cobra.

You paid $1600 for 7 months??!

 

[PatsMom]

Loss of employment by the spouse with coverage is a qualifying event for a change in coverage. My coverage is through a retiree health plan. If my husband were to pass away, I would have to obtain coverage through my employer for myself and my daughter. But its not really part of an emergency fund in that situation.

Worst case, if I lost my job or went out on disability and my husband were killed, I would budget for COBRA in my emergency plan. I have cancer and diabetes so going without coverage is not an option for me.

 

[jm-mom]

We have a year's worth of living expenses in savings and don't include cobra. Our reasoning is if dh lost his job, his entire unemployment check would cover the cobra. We would then have to live out of savings. That almost happened to us a year ago but dh was able to move directly from one job to another with no downtime in paydays. It waqas a scary time for us and I'm glad it turned out alright but my heart goes out to those who have to struggle for a time.

 

[chris31997]

I guess I never thought of it. But it is personal finance. So what you need is not what I need. My prioritiees, will not be your priorities. For you, you have health issues and need CORBRA, we are relativly healthy, so I might risk it for a short time frame. The key word being short time frame.

The good news is you are thinking about it and starting a conversations

 

[disneyfreakk]

You make a very good point! I never thought about adding COBRA to the EF. I will certianly add it in there now!

Thanks,
DF

 

[puffkin]

You paid $1600 for 7 months??!

No, our cobra payment was $1600/month (family of 3). Thankfully my DH got laid off at the end of February so we did qualify for the Cobra reduction act where we only had to pay 35% of that (approx. $560/month). I don't believe that is offered anymore, it was part of one of Obama's recovery acts, and it expired at the end of February. I am not sure if they did end of extending it, but I do not believe it is an option anymore. Evenstill, the $560 was a huge hit to our budget with both of us unemployed.

There are no guarantees that a COBRA reduction would be offered again, so we are saving in our EF under the assumption of having to pay a full COBRA payment.