Funny about Money

The only thing necessary for the triumph of evil is for good men to do nothing. ―Edmund Burke

Update: COBRA, RASL

So yesterday I reported on the flap that arose over the COBRA discount, in which one of GDU’s sterling HR representatives told me that staying on the payroll until December 31 would make me ineligible for the discount on COBRA mandated under ARRAS, the federal stimulus plan. This would mean my health insurance premiums would jump from $26 to over six hundred bucks a month. Even with the discount, the cost will rise to $186, but since I’ll be paying more than that for Medicare, it almost looks affordable.

Not, of course, with almost zero income, but I’ll just have to forego food and other necessities, since at my age I can’t risk going without health insurance.

Well, the story gets better.

I managed to find an e-mail address for an actual human being at the downtown state employee benefits office, taking me outside GDU’s purview. Off went a query:

If my employment with the Great Desert University ends on December 31, will I be eligible for the discounted COBRA?

Here is the reason that I am asking this question:

The federal rule on COBRA premium assistance, posted at www.irs.gov/pup/irs-drop/n-09-27.pdf, says a person is eligible…

(1) who is a qualified beneficiary as the result of an involuntary termination during the period from September 1, 2008, through December 31, 2009, (2) who is eligible for COBRA continuation coverage at any time during that period, and (3) who elects the coverage.

However, at GDU’s “frequently asked questions about COBRA premium assistance” page, this wording appears:

Who is eligible for premium assistance?

A person is eligible for premium assistance if and only if:

He/she is eligible for COBRA coverage between September 1, 2008 and December 31, 2009

AND

The qualifying event that makes him/her eligible for COBRA coverage is a covered employee’s employment being involuntarily terminated between September 1 2008 and December 31, 2009.

The HR rep with whom I spoke yesterday told me that the first bulleted  point, saying you must be “eligible for COBRA coverage between September 1, 2008 and December 31, 2009” means that if I am on the payroll on December 31, that will disqualify me from eligibility for the COBRA premium assistance BECAUSE my health care plan will remain in effect on that day, and so, because I will still be covered by my plan on December 31, I will not be “eligible” for COBRA until the next day, January 1, and therefore will miss the deadline. She believes that as long as your plan is in force, by definition you’re not eligible for COBRA—you have to have been thrown off your plan to be eligible. That is, she is saying that as long as your health care plan still covers you, you are not eligible for COBRA and therefore if you are still on the payroll on December 31, you are not eligible for the COBRA discount.

Is that true?

The way I read the federal rule published on the IRS site, it looks like “eligible for COBRA continuation coverage” means only that you are enrolled in an employer’s health plan and that you are involuntarily terminated between 9/1/08 and 12/31/09. Is simply being covered by your health care plan on the day you are involuntarily terminated enough to disqualify you from the discount, if your termination date is December 31?

Thus I need answers to two questions:

1. Is it true that if I am terminated involuntarily on December 31, 2009, I will not be eligible for the COBRA premium assistance? and

2. If it is true that termination on December 31 will make me ineligible for the COBRA discount, will a termination date of December 30 leave me eligible for the premium assistance?

Thank you for any clarification you can offer. I would like confirmation of the answer in writing, since no one at GDU seems to be certain of these policies.

Shortly, along came this startlingly literate response:

Hello,

Anybody terminated involuntarily between 9/30/08 and 12/31/09 are  all included in the Stimulas.

Thank you,

[the correspondent’s name & position]

{Sigh} I don’t know whether to take the word of a person who thinks that “anybody…are” and who can’t spell or punctuate stimulus. But at least now I have something in writing to support my interpretation of the law.

Ah, but it didn’t end there. Yesterday, the story got even better!

To be eligible for the state’s payout for accumulated sick leave (RASL), you have to be officially considered “retired.” Since I’ve worked at GDU since the early Pleistocene, this benefit amounts to about $20,000 for me, to be paid out in three annual installments.

The way I understand it, this means you make an official statement that you are retiring (and you have to do this within two weeks of your termination day) and you start drawing down from the state retirement system or from your 403(b), whichever you’re in.

As usual making an exception of myself, I want to roll over the $130,000 or so that has accumulated in this plan into my large IRA, which is professionally managed. I’d like to do this a) for the sake of simplicity (fewer statements to handle, fewer bureaucrats to deal with) and b) so that all my money is managed by the same financial management firm.

In connection with this strategy, I’ve been told that to be considered a GDU retiree, you have to leave a small amount in your 403(b) fund. Although you can roll over most of the money, there’s some minimum amount you have to leave in the state’s custody. What that minimum is remains a mystery.

So while I was at the HR office receiving incorrect information about the timing of the ARRAS eligibility, I asked the same font of wisdom if she could tell me what is the minimum that has to stay in the 403(b) to maintain one’s status as a “retiree.”

Well, of course she hadn’t the faintest. She’d never heard of such a thing.

She advised me to call the RASL director at the General Accounting Office to ask about this. I’ve been in touch with this woman before, and in the past she’s been very helpful—she was the one who advised me that the story La Maya and I each heard from HR office on two separate GDU campuses, to the effect that if you’re laid off you’re not eligible for RASL, was wrong.

By the time I reached her the following day, I’d about figured out that everything the HR rep had said about COBRA was just so much B.S., and so I’ll admit there probably was an edge in my voice.

When I asked her what was this “minimum amount” I’d been told had to stay in my 403(b) account, she completely went off on me.

She said that if I rolled my money out of my 403(b) into my own IRA, that would “obviously” mean I was not retired and therefore I could not have the $20,000 the state owes me for back sick leave pay.

I asked her to please define what is meant by “retire,” since I didn’t understand how rolling money out of a 403(b) into another tax-deferred plan would cause you to not be retired. She could not or would not respond to that question, but instead informed me flatly that if I rolled anything out of my 403(b), she would send me a letter rejecting my application for RASL. She started yelling at me (!) that “you can’t have everything you want.” I was so nonplussed it didn’t occur to me to say I’m not asking for everything; all I’m asking for is what I’ve earned over the past 15 years of working 14-hour days, 7 days a week with no overtime.

She then demanded that I call Fidelity and TIAA-CREF, where my 403(b) funds reside, with any further questions. She said they had “hundreds” of representatives who have had experience with this issue and could confirm what she said.

It took an hour and a half to get through the punch-a-button mazes to reach humans at those two worthy organizations. TIAA-CREF has disconnected the line that used to reach a person, so that now all of its published telephone numbers take you to a barricade between its employees and the Great Unwashed. Finally I got a call from a guy I reached through an e-mail form on their website.

At Fidelity, the CSR and his manager had never heard of any such rule. They both said they couldn’t imagine how rolling your money from one tax-deferred fund into another tax-deferred fund would magically make you “not retired.” The manager suggested that the way to get around this crazy woman would be simply to make a small drawdown, as though I were going to take out payments to live on, until such time as she approved the RASL and the first payment hit my account. Then, he suggested, just go ahead and do the rollover. Once she’d approved the RASL, there would be nothing she could do.

He also suggested simply rolling over the first distribution into my IRA. He said there’s no rule prohibiting you from making a roll-over, and although Fidelity has to confirm with GDU that the person requesting a distribution actually is “retired,” there’s no way the GAO woman was going to know where the distribution goes.

At TIAA-CREF, the CSR was amazed and said he also had never heard of any such thing. He said, however, that when the request for confirmation of retirement status goes through to GDU, the form used to make that request does say where the distribution is going. So, he concluded, this woman would be able to see whether I was having the money put into my checking account or whether it was being rolled into another tax-deferred instrument. He recommended taking a minimum distribution, paying the taxes on it, and depositing the remainder into my Roth IRA.

This will mean I can’t consolidate my money from three tax-deferred instruments to one for at least three months after I leave GDU. It takes that long after the demented woman at GAO approves your status as a retiree and gives the go-ahead for the RASL payment for the first of the three annual installments to be disbursed. Since I probably am going to have to make drawdowns from savings to survive, this is going to add to the hassle factor immeasurably.

What a flicking nightmare.

Author: funny

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One Comment

  1. Oh. It WAS too much to hope that the mess was less messy. *sigh*