After waiting on hold for 40 minutes, I obtained some answers to questions that I hope will clarify how unemployed people who have some temporary income can maintain uninterrupted health coverage under Massachusetts Medical Security Program (MSP).
This is an update of my prior post on how the Medical Security Program coordinates with the Federal Economic Stimulus and Recovery Act.
The Medical Security Program provides 80% reimbursement of the amount a laid-off worker pays their employer for COBRA continuation benefits. If you meet the income requirements–400% of the Federal Poverty level. You must apply for MSP separately. See my prior post for information about the initial application process. That will take a couple months to process…the information below is all about how you keep eligible AFTER you have initially qualified and BEFORE you find a new, more permanent job.
- The current processing time from submitting a claim for reimbursement to receiving a check is 4 weeks. The forms I mailed on 4/15 to be reimbursed for my COBRA payments for January, February, March, and April should result in a check by 5/15 or so.
- If you earn more than 1/3 of your base unemployment benefit amount during a given week, your benefit amount will be reduced until you earn 1/3 + the benefit amount. If you reach this limit or fail to file a claim for that week, you will stop “earning” unemployment benefits AND you will be discontinued from MSP temporarily. If you are employed for 90 days, you will be discontinued from MSP and would need to formally re-apply.
- If you stop earning income, you can restart unemployment and MSP–but you have to make two phone calls: one to DUI and one to MSP. The call to MSP must be AFTER your unemployment benefit has been issued for the new week. See my example below.
- As long as you are receiving unemployment benefits for any time during the month, you are eligible for MSP benefits. If you receive an unemployment check for at least one week, you are eligible to have your COBRA payment for that month reimbursed 80%.
I find this confusing, so let me illustrate with an example of exactly what I am doing to ensure my health coverage is uninterrupted.
Last week, I had a small amount of freelance income. When I filed my claim online yesterday, I said yes/yes/yes to the 3 questions on the form. Then, on the next page, I reported the $150 I earned last week. I will recieve a direct deposit of my full benefit amount and my MSP coverage continues.
This week, I have more income. I will file a claim on Sunday that is yes/yes/yes and “too much money.” The system will make me ineligible, but this will not affect the COBRA reimbursements already submitted because I already received a payment for an unemployed week in April (and the other months).
Next week, I will have less income. I will need to start things up again:
- Tomorrow, before May 1, I will write a check to my former employer and obtain a receipt for payment of May COBRA. The amount I owe is 35% of the full payment thanks to the Federal Subsidy.
- Friday or Saturday morning, I will call the DUA teleclaim center and eventually speak with a representative to say, I need to re-open my claim. If I have any income, I will report that it is 1099 income/self-employed; I did not work for an employer. They will re-open my claim if I have less than the maximum allowed amount.
- Sunday, I will go to the online claim form and file my claim. I needed to make the phone call the day before; otherwise, when I log in, it will say I’m not eligible and I will be stuck.
- Wednesday, allowing time for the direct deposit to happen, I will call MSP and wait on hold for another 40 minutes, then say I need to re-activate my participation in MSP.
- After that call, I will mail my recipt and reimbursement form to MSP for the May COBRA payment.
- Sometime soon, I will receive a job offer or land an additional consulting gig that will permanantly remove me from this process!
The key points to remember:
- Don’t forget to pay for next month’s COBRA tomorrow!
- Get a receipt!
- Download a reimbursement form if you need it.
- If you earn some money that makes you temporarily ineligible for unemployment benefits, remember to make 2 phone calls and resubmit your claim–in the order described above–to maintain eligibility for MSP.
- You are required to report your weekly earnings. This means you should report income in the week it was earned, not all-at-once when you receive a check at the conclusion of a consulting engagement.
{ 10 comments… read them below or add one }
Great tips and thanks for sharing your flow.
Caveat: If you consider COBRA or other health insurance options a financial hardship, you can request a waiver and apply for MSP directly after unemployment. I’m a case study of this to success.
Dave- thanks so much for this- this is VERY helpful, but also alarming about the process and the massive amount of paperwork nd handholding you have to do. you basically have to stay on top of 3 people- the MSP, DUA and your employer…
Here’s a question to stir the pot a bit…What is you simply claimed all of your income from consulting AFTER all unemployment/healthcare benefits run out?….
@Ari – yes, that is a good point, especially for single people. Married with a family of 5, 400% poverty level is $98K…assume 50% of last year + unemployment income this year…pretty liberal qualification.
@Tyson – if you were to wait until later, there are a few things I can imagine going wrong. If you do not have a credible way to document your earnings and say, “I did some work last quarter,” and DUI finds out about it, they would average the income over the period equally and issue a determination that they had overpaid you. They’d send you a bill to pay back your benefits. You could appeal that and lose and be guilty of fraud.
I am recording my earnings as billable hours–same idea as what an attorney would do. I have an internal rate and my hours times that rate add up to the amount I invoice on a monthly basis. I believe this audit trail is a fair and honest effort to abide by the law.
Dave,
Thank you so MUCH for this post.
Last month I called the medical benefits line several times and got a recording that they couldn’t handle my call then hung up.
I submitted a qualification form and never heard back.
I didn’t know that I had to send a reimbursement form and had no way of knowing this.
ADP gave me the runaround and the Unemployment office has been no help.
So thank you again.
I sent my application in to MSP about 8-10 weeks ago. Still no response from them. I called at about 6 weeks and left a message since they give no option to speak to a human being. They kindly called me back a week later and left me a message stating that the current wait time for processing an application is about 8 weeks. Now, when I try to call and find out what is going on, their voicemail box is full!
Any suggestions?
Thanks,
~JB
An employee in Massachusetts was earning $500 per week paid by cheque by ( without her declaring this or paying taxes) and $420 unemployment benefit at the same time.
What is her legal position re receiving substantial unemplyment benefits and more than that figure in earned income if she has been reported?
Obviously, that person is breaking the law in at least two ways:
However people should not feel they have to cheat or that mistakes are irreparable.
As a practical matter, when self-employed, there is no “reporting” of income until you file taxes. You do have to pay estimated taxes (2nd payment was due June 15) but there are no forms to file; you are simply estimating your taxes to avoid a penalty at the end of the year when you file. So keep records and report all that babysitting income when you file your taxes on April 14, 2010.
You can earn some money while unemployed and still collect benefits. If the base benefit amount is $420/week, then you can earn $140 (1/3) without any reduction of benefit. Then, you can continue to earn an additional $420 while your UI benefit is reduced dollar for dollar–which means if you earned $500 in a week, you would report $500 to DUA when you file your weekly claim. You should then get a benefit of 420 – (500-140 = 360) = $60. So, for that week, you would have $560 cash AND, more importantly, you would remain qualified for health insurance subsidy under MSP.
There is a perception that you can’t earn ANY money while unemployed and even if you can, it’s not worth the trouble because DUA will “take it away.” But if you are only earning a little more than your weekly benefit amount, it IS possible to remain “legit.” Of course by NOT reporting the income in the example above, you net $920…but you have to evaluate whether you are willing to take that risk and, if you are “found out,” be required to pay back the benefits you wrongfully obtained.
Thank you for all of the useful information.
A couple of questions: 1. How do I know which of my COBRA payments are eligible for MSP reimbursement? 2. Should each month be submitted on a separate claim?
Background information: My MSP approval letter states that the effective date of eligibility is 6/5/09. I lost my job on 3/31/09 and my employer paid my premium until 4/30/09. On 6/1/09 I paid for COBRA minus subsidy for May and June (combined on the same check) and applied for MSP on 6/1/09 (within the 60-day election period, although I wish I knew to apply for MSP earlier). I then paid July, August, and September COBRA on schedule. My employer cashed all of the checks in late July. Does an eligibility date of 6/5/09 mean that my May payment will not be reimbursed?
Thank you. I’ve tried calling the MSP program directly but cannot get through.
Hi Dave, Thanks for the great blog. I submitted my MSP paperwork last week and am hoping to hear back before the end of September (when my 60 days are up). I’m totally confused how the federal subsidy works…will I get a bill from my employer for 35% of the premium automatically? They seemed to think I was going to pay 100%, so not sure how the 65/35% is communicated to employers/enforced??? Any thoughts?
Thanks,Dave, for all the great info.
The maximum time to pay COBRA and thus receive MSP is 18 months.It has worked well for me…just be patient getting the reimbursement.There is a 8 week lag time now. Next month will be my 18th month and I am faced with puchasing health insurance with no full time job on the horizon. Suggestions?