@busdriver11 – HELOC’s were abruptly terminated during the mortgage meltdown, even for many borrowers with great credit and payment history.
http://www.pbs.org/wnet/tavissmiley/a-wealth-of-knowledge/yanking-home-equity-line-of-credit/
I like a stash-o-cash.
Yes, @arabrab, my sister was caught up in that one. It was a really awful deal for her (they lowered the amount she could borrow, didn’t cancel it) which lowered her credit score also. We were fortunate, our HELOC was unchanged. We’re paying it off pretty rapidly and should have it completely paid off in about 4 months or so. We do have access to a fair amount of cash should we actually need it, but since we’d rather pay off the loans charging interest than have our money sitting in an account, we’re just going with it. Though I admit, when all of our rental condo debt is paid off (maybe by June), we might actually have excess cash…sitting in an account. What a feeling, I can only imagine!
In the OP, re health insurance-- if you lose your job-related insurance, you can take ACA marketplace coverage instead of COBRA, probably at a vastly lower cost. Unfortunately, that protection may be taken away by the incoming powers that be, but for now, it’s the law.
^^However, it may be better to sign up for short term care if you think you are going to be just temporarily employed. Cheap, instantaneous, monthly. My son just went through this, and now we are fearful he’s going to get stuck with ACA penalties due to no fault of his own. But at least he is now insured, which is the main thing.
^^However, it may be better to sign up for short term care if you think you are going to be just temporarily employed. Cheap, instantaneous, monthly. My son just went through this, and now we are fearful he’s going to get stuck with ACA penalties due to no fault of his own. But at least he is now insured, which is the main thing.
Right, busdriver, it’s good that short term insurance is available for those situations. I was addressing the scenario of long-term income loss. One of the many protections of ACA which people seem to forget is that if you lose your job, you don’t also have to lose health insurance.
That is a good thing, LasMa, and I hope that part of it isn’t lost. However, it seems to be more long term, and how many people think they will be out of a job long term? That seems a difficult decision to make, to choose to sign up for something semi-permanent, and more expensive, if you might only be out of a job for a few months. I suppose if you had serious health conditions and pre-existing conditions, it would be the right choice regardless. Cobra is crazy expensive.
COBRA is no more crazy expensive than is employer based insurance. Its just that the employer isn’t picking up a portion of the premiums. Its one of the downsides of employer based health insurance in terms of total costs of healthcare: employee is insulated from portion of the cost picked up by employer.
Here’s how I would look at it if I suddenly found myself without a job. I’m older than your son (believe it or not 
), and realistically I’d assume that I was going to be out of work for a good long time. Yes, Cobra is crazy expensive, so I’d go to the marketplace. Since I would have lost my income, I’d probably get a significant subsidy to pay for it until I found work, and it wouldn’t matter how long I was unemployed. If my new employer offered insurance, I’d transition to that. If not, I could keep my ACA coverage, though I’d probably lose the subsidy. But no matter how it played out, I could get insurance, and that’s something we never had before ACA.
You can also ladder CDs for a tiny bit more interest. http://www.thesimpledollar.com/creating-a-cd-ladder-for-your-emergency-fund-or-other-savings-to-earn-a-better-safe-return/
oops see, this was already mentioned.
That sounds like a good plan, but I don’t think you can get ACA insurance immediately. Your wait could be a few weeks to several weeks after you apply, unless I’ve misunderstood the system. Good enough if you know in advance that you’ll be losing your job.
I should have started a thread on this, I had a lot of questions. But what’s done is done.
busdriver, according to this, your ACA insurance would begin the first day of the month after you lose your job. Since job-based coverage continues until the end of the month you lost your job, there shouldn’t be a gap.
https://www.healthcare.gov/have-job-based-coverage/if-you-lose-job-based-coverage/
You do have to jump on it, though. I think you only have 60 days to apply; otherwise, you’d have to wait until the next ACA open enrollment.
I believe with our “cobra-like” option, we would pay an additional 2% administrative fee in addition to 100% of the premium, so basically 102%. It was not as high as buying an individual policy because it was still at the large group rate but I don’t know the cost compared to ACA rates because D doesn’t qualify for any subsidy since she has NO income.
Whether an ACA plan will be more or less expensive than a COBRA plan from your previous employer depends on what coverage each offers, as well as the demographics of those covered under each. However, the high cost of health care in the US means that any plan from either an ACA marketplace or COBRA is likely to cost enough that such costs (no longer subsidized by your employer) needs to be considered in your emergency fund needs for covering loss of job or income.
If you are currently employed with an employer with a choice of different medical insurance plans with different costs (total costs, not just costs to the employee), but considering the possibility of losing or leaving your job before you become eligible for Medicare, you may want to consider your choice of employer health coverage with an eye on COBRA costs after you lose or leave your job.
Daughters bf was laid off in October. He chose to pay Cobra and then start ACA plan in January. He made decent money for the year so he knew even the ACA would be expensive. But with the new year he is expecting much less income.
If the average american family of 4 has an income of $50,000 there is very little left for savings. Health care and a 401 k match already eat up a great deal of ones monies. Unexpected small bills like new car tires or breaks can quicly dent the little savings one has.
ucb, you’re right that the COBRA plan could be less expensive than an ACA plan, depending on what plan the employer had (and most employees are shocked when they find out how much their employer-based premium was). But don’t forget to factor in the lost income. If the worker who just lost their job was the sole income-earner in the family, they are going to quality for a huge subsidy through the ACA marketplace, a subsidy which would not apply to the COBRA plan. If the spouse makes a decent income, though, there would probably be little or no subsidy through ACA.
In my son’s case, he realized on the 26th, that he actually hadn’t been insured for the last three months, when he thought he had been. Too late for Cobra, and ACA insurance wouldn’t have started on Jan 1, but Feb 1, I think. Murphy’s law says that gap is when something expensive will happen. I believe that if you apply between the 15-31st of a month, ACA doesn’t become effective the next month, but the one after. I don’t think they work that quickly, unfortunately.
Ugh, Murphy’s law is right. Everything about our insurance system is terrifying. I can’t wait till I hit 65 and this all becomes automatic.
You’re correct that if you qualify for Special Enrollment, applying after the 15th would mean your coverage wouldn’t start the next month, but the one after that. If by not working that quickly, you mean it may take a while to complete the process, you’re right about that too. My D moved from one state to another in mid-2014. She applied on June 9th or so, for July 1 coverage in her new state. As this whole Special Enrollment thing was brand new at the time, it was a bit of a cluster-f to get her in their system. But they go by application date, no matter how long it takes for them to get everything up and running. She didn’t have her card in hand until IIRC September. But her coverage was effective July 1, and all medical services in July and August were covered retroactively.
You should have seen me hyperventilating when we realized our son had inadvertently been uninsured for the last three months. In my mind, you don’t go a single day without coverage, no matter what.
I think people’s emergency fund could be a lot smaller if they didn’t have to factor this costly puzzle of unknown insurance into it.
Yes, it is awful that insurance is such a difficult and convoluted process in the US.