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.

• tax evasion for not reporting the under-the-table income to the IRS
• fraud for continuing to claim benefits while receiving more income than allowed

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.

Any suggestions?

Thanks,

~JB

@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.

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?….

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.