"Snake Charmer in Syracuse" - The Business of Furniture 4/20/16 - Stephen Says

Dear Stephen:

I just landed a new job. I was poached away by my new employer, and the company told me, as they were extending the offer, my new medical coverage won’t kick in for 90 days. How can that be? When I quit my job, my medical, of course, was completely discontinued. I’m told by my new employer that I should go on COBRA. What does that mean? “Cobra” is a snake, isn’t it?

It’s going to cost me almost $1,000 a month for three months, which is ridiculous. Shouldn’t my new employer pick that up? Or at the very least, pay the percentage they’re going to pay of the medical benefits they offer me anyway once they start? What’s the protocol on this? What do most companies do? What do I have a right to ask for?

I don’t want to lose my new job, but almost $1,000 a month, even if it’s $800 × 3, is a lot of money for me. What do I do without compromising this new great job I have, or possibly alienating myself from my new bosses?

— Snake Charmer in Syracuse


Dear Charmer,

First, let me explain to you that COBRA stands for the Consolidated Omnibus Budget Reconciliation Act. I should know what it means, but I don’t. And I agree, it does sound like it has something to do with a snake.

Congress passed this legislation in 1986 so employees have the right to continue coverage in their existing group plans. It’s a federal law that applies to employers with 20 or more employees.

It is expensive for the employee. I know. I tell people when they’re fired from a job, as part of their severance, they should ask their employer to pay their COBRA (medical) for 3–6 months. Those of you reading who think you might be getting the ax should remember that. Always try to get your medical COBRA coverage included as part of your severance negotiations.

For all the complaints about Obamacare, let’s face it, we all need medical coverage. Life’s a bitch, and I promise you if anything does end up happening you’ll be very happy to be covered.

There’s no definitive answer to your question about who pays for the interim COBRA care. Every company and every state has different policies on when they can enter someone onto their medical insurance. Sometimes it’s the company’s policy. Sometimes it’s a state regulating it. And sometimes it’s an insurance company rule of the carrier they use, depending on the type of medical insurance the company is buying to cover their employees.

Here’s the thing: They can’t make any exceptions to the rules already in place. So find out what that is early in the negotiations of a new job. Here’s some backstory so you can better understand what’s going on. Most of the companies, particularly manufacturing companies, have thousands of employees. The majority of employees are working in the factory. It’s not unreasonable to understand they go through a lot of people in any given factory, so often the company wants to have a probationary period, usually 30–90 days. Without this grace period, they’d constantly have factory workers on and off the insurance. Whatever they do for one group of employees, they have to do for everyone. Hopefully this helps you understand where these policies come from.

Now on to who pays what, when and where. It’s common for companies not to offer to pay for your COBRA for those three months, but each scenario is different. Thirty days is the norm for new coverage to kick in. If they’re poaching you, it seems like they should pay for it. On the other hand, if you’re unemployed when you get a new job, and you have a month or two left on your COBRA, why should they pay for it?

As a point of reference, I’d say about 50 percent of The Viscusi Group clients who poach someone, and whose company medical benefits don’t start for 30, 60 or 90 days, offer to pick up the tab for COBRA. Which, of course, means the other 50 percent of my clients who poach people won’t pay the difference when the candidate has to go on COBRA. No matter what. So you need to find out before you take the offer.

And, don’t forget, many of you have families, spouses or children, who are part of that COBRA, and they are rarely paid for under any circumstances. It’s tough, but it’s the price of changing businesses, hopefully for a better job.

This is a very relevant question today, and something which I suggest you ask about during the interview process if you’re considering changing jobs. Maybe not on the first interview, but if you go to three interviews, ask the potential new employer when their medical kicks in. Trade secret: It is the HR person you interview with that is the one who knows the policy, and it is the hiring manager who can usually push to get the COBRA paid. Occasionally, they’ll say the coverage kicks in immediately, and that’s great. Most times, however, they’ll explain about the probationary period somewhere between 30 and 60 days, so ask them if they’ll pick up that one or two months of COBRA, or at least contribute a portion of the cost. If you’re really good with a flute, you just might be able to charm them into it.

— Stephen