Friday, March 21, 2008

Wall Street feels the effect of insurance laws

Another wave of Wall Street workers will be looking for new jobs in the wake of the Bear Sterns takeover this week. The Wall Street Journal reported that Bear Stern employees expect further downsizing in coming months. J.P. Morgan Chase expects to layoff additional employees this week after releasing about 6% of its work in November 2007. Lehman Brothers, Morgan Stanley and Citicorp have also recently released employees. Despite the high income stereotype of Wall Street, not all of these people can afford a layoff. Many of these workers live paycheck to paycheck, just as in other industries. Our article “Surviving a Layoff” with practical tips on basic financial planning during a job change is accessed as often by Wall Street area workers as in any other part of the country.

In addition to the challenge of making ends meet without a paycheck, these employees now face the added cost of paying for their own health benefits until they land another position with employer-paid health care. These employees have the choice of keeping their existing health plan through COBRA or enrolling in alternate coverage.

Most of the lower paid Wall Street workers living in New York State or New Jersey will find few affordable health insurance alternatives due to restrictive insurance laws in those states. The simple and inexpensive type of short term medical insurance used to fill gaps between jobs is not available in either New York or New Jersey. COBRA coverage and similar alternatives are expensive – more than $1,200 per month for any type of family coverage. Those who opt to go without any coverage may compound the problem by triggering a little-known provision in federal law that requires them to satisfy a new six month waiting period even after their new employer-provider health insurance is in effect.

A smaller number of Wall Street executives commute to the city from distant suburbs. Residents of Connecticut, Rhode Island and Pennsylvania will have it easier during their layoff. Not only will these workers get a temporary reprieve from the daily commute to Manhattan, they will also find that there home state of residence makes a wide range of temporary health insurance options available at a fraction of the price paid by their NJ and NY neighbors. Web sites like list high quality short term major medical plans on a state by state basis. The cost is under $400 per month for family coverage in most parts of the country – a manageable issue for most households.

The difference in the cost of health insurance - $400 vs. $1,200 – means a whole lot more when you are out of work and trying to make ends meet until the next secure job comes along. We believe that is past time to tell the legislatures in New York and New Jersey that their residents need the same options as their neighbors in surrounding states.

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