Casting for those stimulus benefits
Sunday, February 22, 2009
Patrick Dempsey, an executive at a San Jose brokerage that administers health insurance for high-tech firms, said he is preparing for what he thinks will be an onslaught of calls from hundreds of recently laid-off Silicon Valley workers seeking information about a provision in President Obama's $787 billion economic stimulus plan that will make it easier for them to continue their medical coverage.
Last week, Dempsey began sending letters on behalf of the companies that laid off the workers notifying them that a new federal subsidy will allow them to pay 35 percent of the cost of maintaining their health insurance -- down from the 100 percent requirement. The prospect of spending hundreds more dollars a month for insurance on a vastly diminished income has forced many unemployed people to go without coverage.
"If you're a laid-off employee and you get a letter [about this] it's going to get your attention," said Dempsey, vice president for business development at Advanced Professionals Insurance and Benefit Solutions.
The stimulus plan provides billions of dollars to not only state and local governments, highway departments, national parks, police departments and schools, but to consumers. And the question becomes: What's in it for me?
The law, which Obama signed Tuesday to revive the moribund economy, offers a range of financial benefits: People paying college tuition can get tax credits, more grant money and clearance to use 529 college savings plans for computer purchases. Homeowners can get a tax credit for buying energy efficient appliances and windows. Public aid recipients will get more food stamps. And the unemployed will be able to not only receive assistance to pay for their health care, but get more aid for a longer period and better access to job training.
Whether the ambitious array of programs will speed the recovery is an open question, experts say.
Still, the immediate concern for consumers is how they can get access to the funds to stimulate their personal economies. Financial planners, tax advisers and other experts are only beginning to wrap their minds around the changes. Most provisions are straightforward, but some -- such as the health insurance program for the unemployed -- are controversial and require advisers to provide careful explanation.
Seeking to offset the steady escalation in college tuition, the stimulus plan offers assistance to students in all income groups.
Under the plan, Pell grants for needy students will be increased from $4,731 to $5,350 in July. The grants will rise to $5,550 during the 2010-11 school year.
"It's good news," said Phillistia Carpenter, 38, a medical radiology student at UDC, where trustees last week approved a proposal to nearly double tuition in 2010. Carpenter, who pays her tuition with the grant, added, "It will help me because I don't work much. . . . And books already are high as a kite."
The plan also will add $200 million to the $1.1 billion work-study budget, allowing tens of thousands more students to earn an average of $1,479 to help pay their tuition.
"What this means is that more students will be able to participate in work-study," said Justin S. Draeger, vice president for planning at the National Association of Student Financial Aid Administrators. "Students who participate in work-study are more likely to graduate."