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Blessing In Disguise

Well another of the handful of blogging folks I talk to about non-blog activities is now out of work too. Outside The Beltway's James Joyner got the downsizing axe swung his direction this morning.

Now this is a subject that I know something about...

Anyway we talked a few weeks after I lost my job, and I got the sense that his number was coming up at some point too. My two month journey through the metro DC job market indicates that while it's not like the dot com heyday, the market is good.

The funny thing is that my layoff forced my hand, and now I stand to make substantially more than I did before. You won't find me in the job creation statistics either, I'm an independent contractor. Why? One word - COBRA.

COBRA Continuation Health Coverage allows individuals who have been laid off to pursue entrepreneurial activities or independent contracting rather than take a new job with benefits. The benefits to the economy are obvious. It's a mystery to me why greater emphasis on extending the length of coverage or grandfathering a right to long term continuation of benefits has not been pursued by Republicans.

Health care costs are skyrocketing so no one wants to loose health care coverage. Thanks to COBRA, downsizing or termination do not mean the end of your health benefits (for the most part). Having your health benefits firmly in place for 18 month allows you to consider work arrangements and activities that you otherwise might not choose due to a lack of health benefits.

The key to economic prosperity and entrepreneurial growth is affordable health insurance. As you get older coverage for pre-existing conditions becomes a big issue when you have to go from one plan to another. New health plans typically won't cover pre-existing conditions, so you really need the ability to stay with your current health insurance coverage. The simplest way to effect that change is to grant the right to keep the insurance you already have as long as you want, at the rate your old company is paying (plus the 2% administration fee).

Freed from the need to subjugate their ambitions to the mercy of health coverage the American worker will have to opportunity to truly become a "free agent." Look how well that worked out for A-Rod...


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Comments (5)

One health care policy solu... (Below threshold)

One health care policy solution: eliminate pre-existing condition exclusions for new employees.

Tax revenues would soar as indentured servants afraid to leave their current jobs would earn more AND pay more premiums.

Statistically, it'd be a wash for the insurance companies as they traded policy holders.

Getting laid off from my jo... (Below threshold)
Fritz:

Getting laid off from my job of seven years was the best thing that ever happened to me. I've made a vow never to stay in any position longer than three years. Moving on is the only way to move ahead these days.

COBRA can be expensive depending on your employer. An employer with a large workforce can negotiate better insurance rates than a small company. The difference between what someone who worked for a large company pays and what someone who worked a small company can be more than $200 a month from examples I've seen recently.

One gotcha with COBRA, if y... (Below threshold)

One gotcha with COBRA, if you become a sole proprietor or partner without incorporating, is that COBRA payments cannot be used for the deduction for "self-employed health insurance." You can only use a plan you have lined up yourself for that.

That strikes me as a slap at any goal there might be of COBRA making entrepreneurial startups easier.

But then, the fact that you can incorporate and deduct all your health insurance, but can only deduct 60% if you don't, also strikes me as rotten.

When you said COBRA, I was ... (Below threshold)
Jess:

When you said COBRA, I was sure that you had hooked up as an independent contractor with G.I. Joe's arch-nemesis. ;)

Aaron, et.al. -I w... (Below threshold)
JB:

Aaron, et.al. -

I work alternately on a contract basis, in between occasional stints as a "direct" employee, so I have some fairly recent experience with the continuation-of-health-insurance game. Three items: First, if you go onto COBRA coverage, or if you change employers and were covered under the previous employer's health insurance, there should be no pre-existing condition exclusions - unless your new employer's health plan is pretty punk. If the new plan is any good at all, the most you might have to do is provide proof that you were formerly covered, and (with some employers) wait out a 30 to 90 day period before you're "on" the new plan. COBRA is continuance of your existing insurance; only diff is, YOU now pay the whole premium.

Second - every state I know of now affords you the opportunity to purchase coverage via your state of residence once the COBRA runs out (and sometimes the COBRA runs longer than you think - the last time, mine went 21 months - you'll want to watch that closely). The operative word, of course, is "afford" - as in, can you afford it? Some states are WAY more expensive than others, and the coverages can vary widely, too. You will want to investigate this WELL in advance - it may actually be worthwhile to establish residency in a state where the coverage is cheaper and better, before the COBRA clock runs down.

Finally - There are any number of trade associations, etc. that, for a nominal membership fee, will give you a shot at reasonably good, reasonably priced health insurance coverage, with no cutoff at 18 (or more, or less) months. If you do any writing, for instance (ALL bloggers WRITE, hint, hint), there are several independent writers'/artists' groups that do this. Something to investigate...let your Google-search engine do the walking.

Pass it along - don't let health-care worries stifle your urges towards independent enterprise!




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