So, my layoff FINALLY came... a COBRA question.

[Papa Deuce]

I am SO HAPPY that the layoff came. The most my job could have lasted was another 4 months, so, I volunteered for a layoff so I could be with my family.

Anyway, as part of severance they are willing to pay 4 months of COBRA, but since I am already on my wife's medical plan, is there any reason to accept the COBRA benefits?

 

[ahutton]

When DH was riffed a few years back, if you elected to reject COBRA, they offered a payout instead. Any chance you can ask if there is an alternative to the COBRA coverage? It helped us with extra expenses while DH found the right job.

 

[clh2]

If they do not offer a payout, I would take the insurance...

 

[nskjerven]

i think it depends on if you would use it or need it. sometimes you can have double coverage and have them compliment each other. primary pays what it pays and then secondary kicks in. If you had any health issues I'd take it.

 

[bumbershoot]

...but since I am already on my wife's medical plan, is there any reason to accept the COBRA benefits?

I wouldn't.

 

[mamacatnv]

if you are not currently enrolled in your plan then COBRA is not an option for you. You must be enrolled in order to receive the benefit.

If you are paying to be on your wifes plan and if you could enroll in your companies plan and have them cover the cost for 4 months that might save you some money. Also the Gov't is subsidizing COBRA premiums for a 9 month period and this option is available to all persons who become COBRA eligible thru the end of this year. The subsidy is for 65% of the premium.

In other words if you are paying to be on your wifes plan it could work out to save you some money between the employer paying the premium for 4 months and then the ability to continue the coverage at the reduced price for an additional 5 months.

However since you are not on the plan and unless you are in active open enrollment you can't just ask to be added to the plan you have to be taken off your wifes thus creating a "qualifying event" and then get enrolled in your employers plan. The time frame may not work due to your layoff.

The bottom line - you are most likely not even eligible to receive the COBRA option and I would negotiate it into a larger cash severance offer if at all possible.

 

[jlima]

I am SO HAPPY that the layoff came. The most my job could have lasted was another 4 months, so, I volunteered for a layoff so I could be with my family.

Anyway, as part of severance they are willing to pay 4 months of COBRA, but since I am already on my wife's medical plan, is there any reason to accept the COBRA benefits?

Be aware - If you take the COBRA money, for tax purposes, it will be considered part of your taxable income. Also, are they paying you more than four months salary as part of your severance? If so, you are receiving $$ NOW that you normally wouldn't receive until 2010 (if you still had a job); and it will be part of your taxable income for 2009. You will have to pay tax on all of the severance package for 2009, because you are receiving it in 2009. And, all of this money may kicks you into a higher tax bracket. Be aware of the financial hit you may take.

I am surprised they offered the COBRA $$ as you aren't already covered by their health plan. It seems as if they are offering compensation for something they don't need to.

When I was laid off & received severance last year, I received one giant check for my severance and COBRA money lumped together (that they took taxes out of). I was responsible for sending the money to the 3rd party that administered our health insurance. I was free to simply keep the money if I wanted to.

Good luck with making a decision.

 

[barkley]

remember-cobra is'nt just "medical", it can include things like vision and dental.

when dh left his last employer he and the kids were covered under my medical and dental, we were paying zero to his employer BUT his employer automaticaly covered all employees with dental and vision. we ended up doing cobra just for the dental and vision for a period of maybe 4 months because we crunched the numbers and it was WAY less than what losing vision and double dental coverage would cost us (and belive me during those 4 months everyone got their eyes examined and their new glassess done, all the dental work dh and i had been putting off for ourselves was done)-in the long run it saved us $$$$.

i'de check and see why they are offering you cobra-unless you have some kind of coverage the employer is under no obligation to offer it, so their offering it let alone offering to pay for it leads me to wonder if you've got some coverage you may not be aware of.

 

[Papa Deuce]

Be aware - If you take the COBRA money, for tax purposes, it will be considered part of your taxable income. Also, are they paying you more than four months salary as part of your severance? If so, you are receiving $$ NOW that you normally wouldn't receive until 2010 (if you still had a job); and it will be part of your taxable income for 2009. You will have to pay tax on all of the severance package for 2009, because you are receiving it in 2009. And, all of this money may kicks you into a higher tax bracket. Be aware of the financial hit you may take.

I am surprised they offered the COBRA $$ as you aren't already covered by their health plan. It seems as if they are offering compensation for something they don't need to.

When I was laid off & received severance last year, I received one giant check for my severance and COBRA money lumped together (that they took taxes out of). I was responsible for sending the money to the 3rd party that administered our health insurance. I was free to simply keep the money if I wanted to.

Good luck with making a decision.

Oh, I guess it was my mistake... I had my own coverage while working, but I was also covered under my wife's plan.

 

[jlima]

Oh, I guess it was my mistake... I had my own coverage while working, but I was also covered under my wife's plan.

Then take the money . . . but be aware it's going to be considered part of your 2009 compensation; and it will be taxable income. Good luck.

 

[manning]

Then take the money . . . but be aware it's going to be considered part of your 2009 compensation; and it will be taxable income. Good luck.

What you take in 2009 is taxable in 2009. If they allow you to spread it out over several years do so. It wll minimize your taxes by keeping you in a lower tax bracket. Of course it may be tricky after 2010 as Brush's tax cut ends and brackets change.

 

[Micca]

No advice, but enjoy the time with your family.

 

[HERSEY]

I would take the cobra. I would rather have 2 coverages in case something happens. I am assuming you covered your wife and kids on your plan, in that case they also would be covered under the cobra.


Sounds like a pretty good severance package.