Recession Rescue: Where to Go for Help

Help for first-time home buyers: Another provision within the economic stimulus package signed by President Obama last month provides a major boost to first-time buyers.

This boost comes in the form of a tax credit worth up to $8,000 for homes purchased this year by buyers who did not own another home within the previous three years.

This $8,000 credit is distinct from last year's $7,500 credit for first-time buyers that had to be repaid over 15 years and acted essentially as an interest-free loan.

This year's $8,000 credit does not need to be repaid. However, this credit is offered only for 2009 purchases. Eligible buyers must file a tax return to claim the credit.

Normally, the credit would not be received until filing the 2009 tax return next spring. However, last month the IRS instituted a special provision allowing first-time home buyers who purchase a home before Dec. 1 to claim the credit this year on the 2008 return due April 15.

If you expect to buy a home after April 15 of this year, you can avoid waiting until next year to claim the credit by either filing an amended 2008 return later in the year or filing for an extension of your filing deadline by April 15.

For information on this credit, visit the IRS Web site, www.irs.gov, and look for Form 5405, which must be filed to secure this credit.

Health insurance for laid-off workers: Another small part of the 407-page economic stimulus legislation is a provision that makes health insurance much more affordable for laid-off workers.

This provision provides a federal government subsidy to allow laid-off workers to purchase Cobra health insurance coverage through their former employers at a cost 65 percent less than what they otherwise would have paid.

For many years, employees who left a company had the option of continuing their employer's health insurance coverage under Cobra (Consolidated Budget Reconciliation Act of 1985). But that coverage came at a high cost as the employee was required to pay the full premium as opposed to just a portion, as when they were working for the company.

For a family plan, that full premium can easily hit $1,400 a month.

Under the stimulus package, workers who leave their jobs involuntarily between Sept. 1, 2008, and Dec. 31, 2009, can elect Cobra coverage and pay 35 percent of the premium for up to nine months.

In the example above, the $1,400 monthly premium would be reduced to $490. The cost difference is being picked up by the federal government in the form of a subsidy to the employers who provide the group coverage.

Workers who were laid off before the stimulus package was signed into law and declined coverage the first time around are eligible again to go back and re-elect Cobra coverage at that 35 percent rate.

Laid-off workers eligible for health insurance coverage from another source, such as Medicare or a spouse's plan, do not qualify for this reduced Cobra coverage.

For information on the Cobra subsidy, visit the U.S. Department of Labor Web site,

www.dol.gov/cobra.html. The IRS web site, www.irs.gov, also provides information.

Employers are supposed to reach out and provide notice of eligibility for this reduced-cost Cobra coverage. They have 60 days from Feb. 17 to contact former employees, and those eligible will have 60 days to choose this coverage.

If you don't hear anything soon, contact your former employer yourself.

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