Join Early Retirement Today
Reply
 
Thread Tools Search this Thread Display Modes
Cobra coverage
Old 10-31-2014, 09:05 AM   #1
Dryer sheet wannabe
 
Join Date: Sep 2014
Location: Sarasota
Posts: 14
Cobra coverage

Today is the last day of work for me. Hooray! I want to sign up on Nov 15 for ACA coverage and am eligible now for Cobra coverage. I have 60 days to elect Cobra. Is it wise to wait and not elect Cobra unless we have a need for insurance in November or December and save the $1050 per month coverage rate?
__________________

__________________
2Muchfun is offline   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 10-31-2014, 09:45 AM   #2
Recycles dryer sheets
 
Join Date: Jan 2014
Location: Austin
Posts: 496
That's what I did - I planned on paying for COBRA during the 60 day election period only if it became a "necessary business decision" for me and then signed up for a Bronze plan during the final weeks.
__________________

__________________
ER'd 6/1/2014 @ age 53. AA=70/30, WR=3%
Looking4Ward is offline   Reply With Quote
Old 10-31-2014, 09:48 AM   #3
Thinks s/he gets paid by the post
sengsational's Avatar
 
Join Date: Oct 2010
Posts: 3,849
Great timing! The strategy I used was to not decline COBRA, and not accept COBRA. If "something bad" happens in the next 60 days, you accept COBRA. Otherwise, you wait for your new coverage to start in January. If you accept COBRA now, you walk away from the PPACA subsidy. Access to COBRA is a question they ask in the signup, but AFAIK, that doesn't knock you out of being eligible for the subsidy. To be clear, access to is ok, but accepting and being signed-up is not.
__________________
sengsational is offline   Reply With Quote
One Way to Analyze PPACA Policies
Old 11-13-2014, 10:32 AM   #4
Thinks s/he gets paid by the post
sengsational's Avatar
 
Join Date: Oct 2010
Posts: 3,849
One Way to Analyze PPACA Policies

Shopping for HI on the marketplace can be quite different from the limited choices that your company may have offered. Here I'll outline how I proceeded.

I started out with the spreadsheet in this link: 2015 ACA Premium Increases

There is also another one in this link, FYI, Health Insurance Options comparison model, which I haven't tried.

But if you look at the inputs, you'll see that you'll need to specify how much and what kind of services you expect to use, so I had to step-back and look at history.

With my family of four, I saw that over the past 22 years, we really went to the doctor very few times. The records were spotty because of how things got paid for, but I did keep track over the years of every visit, even if it didn't have an associated payment (for instance preventive stuff, dental cleanings with the company plan, etc). But whatever YOUR case, you need to look back in order to look ahead for your expected usage.

Then I created a second scenario where somebody needed to go to the hospital on top of our regular usage. I presumed in this scenario that the person incurred expense beyond the out of pocket max.

I got two approximate values for a few categories of policies. The value was the sum of the premiums, plus the amount I'd be paying for services. Then I'd use a rough likelihood to get a single value.

So, for instance, selecting a policy that pays nothing until the deductible is reached and the premiums were $1000/mo, and I'd have 10 doctor visits at $135, that expected cost would be $13,350. And then for the SAME policy, I'd run a case for all of the above, plus, say, $10,000 for a hospital bill (but we'd hit the out of pocket maximum, so I'd only spend $5000). Then I'd guess that it's 5% likely we'll need hospitalization during the year, so that policy would have an expected cost to me of .05*17000 + .95*13350 = $13,532. This is the comparison number.

Then I would take another policy, say one that had a similar out of pocket limit, but covered 5 doctor visits a year in full, then a 20% copay for doctor visits. Since the math gets complicated, I just assumed that all visits would be free (giving this analysis an upward boost in the rankings). But still, if the expected scenario happened (10 doctor visits for free), the additional premiums on the policy exceeded the value of the free doctor visits. For instance, if the premiums were $1200 per month, then the expected value would be .05*19400 + .95*14400 = $14,650.

Since the second policy (free doctor visits) has an expected cost that exceeds the first policy (pay 100% up until deductible), I'd choose the first policy.

In this example, I had two scenarios. You could have more, so you might say scenario1*.80 + scenario2*.10 + scenario3*.10, but that was too much work, even for me!

The hardest part for me was pricing the scenarios against the various policies. This requires that you can translate between the words on the summary of benefits and how that affects what you pay for services. For me, with light utilization, the policy that paid nothing until the deductible was reached was hands-down the best bet. In fact, I'm going to research the over 30 catestrophic policies this year because what I'm buying is the out of pocket max, and they're all capped! So for me, at this juncture, no expensive meds, no frequent doctor visits, the insurance is only for "if something unexpected and bad happens".

On thing to remember when you're doing your historical medical utilization is that you need to subtract out anything that is considered "preventive" under PPACA; no matter what policy you get, that's not something you lay-out cash for.

So, there you have it, it's not easy. This will never happen, but it would be cool if you could build likely scenarios and drop each scenario on various policies and get an expected value for that scenario. Sort of like the example that's on the summary of benefits, but dynamic (no, I don't care how much it costs to have a baby!) At this point, you have got to know all the mechanics and slog through it.
__________________
sengsational is offline   Reply With Quote
Old 11-13-2014, 12:55 PM   #5
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
pb4uski's Avatar
 
Join Date: Nov 2010
Location: Vermont & Sarasota, FL
Posts: 16,481
What you describe is the approach I use as well. Essentially we are creating some plausible alternatives and calculating an expected value of the cost of each alternative and selecting the alternative with the lowest expected cost. Actually, my HI provider website has a Q&A tool where you indicate the number of PCP and specialist visits you expect to have, info on your Rx and they provide estimated costs for each policy they offer (low is premiums only, middle is with visits indicated and max is MOOP) and is helpful in comparing plans. Since we are healthy and have minimal claims ($0-$3k/year) the cat policy has been best for us.

One thing I'll mention is to look carefully if your policy is for more than one person how deductibles work. We found that we were better off to have individual policies (one for me and one for DW) rather than one policy for both of us because the deductibles were aggregate rather than stacked.
__________________
If something cannot endure laughter.... it cannot endure.
Patience is the art of concealing your impatience.
Slow and steady wins the race.
pb4uski is online now   Reply With Quote
Old 11-14-2014, 08:08 AM   #6
Dryer sheet wannabe
 
Join Date: Sep 2014
Location: Sarasota
Posts: 14
Thank you for all your feedback. I read somewhere that to get a subsidy you must purchase a Silver Plan. Is that accurate or perhaps an old rule? I do see subsidy discounts in all of the "metal" plans when I review this. My income is low after FIRE; only reporting a small amount in dividends and capital gains (expected) in my taxable account, plus some (planned) Roth conversions.
__________________
2Muchfun is offline   Reply With Quote
Old 11-14-2014, 08:31 AM   #7
Thinks s/he gets paid by the post
 
Join Date: Sep 2006
Posts: 1,322
Quote:
Originally Posted by sengsational View Post
Great timing! The strategy I used was to not decline COBRA, and not accept COBRA. If "something bad" happens in the next 60 days, you accept COBRA. Otherwise, you wait for your new coverage to start in January. If you accept COBRA now, you walk away from the PPACA subsidy. Access to COBRA is a question they ask in the signup, but AFAIK, that doesn't knock you out of being eligible for the subsidy. To be clear, access to is ok, but accepting and being signed-up is not.
So if you don't decline COBRA and you had a claim during the 60 days wouldn't paying the premiums disqualify you for the subsidy for the remainder of the year? Would you then continue to pay the COBRA rates for the year?
__________________
Corporateburnout is online now   Reply With Quote
Old 11-14-2014, 10:38 AM   #8
Thinks s/he gets paid by the post
 
Join Date: Feb 2014
Posts: 1,050
Quote:
Originally Posted by 2Muchfun View Post
Thank you for all your feedback. I read somewhere that to get a subsidy you must purchase a Silver Plan. Is that accurate or perhaps an old rule? I do see subsidy discounts in all of the "metal" plans when I review this. My income is low after FIRE; only reporting a small amount in dividends and capital gains (expected) in my taxable account, plus some (planned) Roth conversions.
Cost-sharing is part of the Silver plans if your income is not over 250% FPL. The "subsidy" tax credit can be for any metal plan.
__________________
jim584672 is offline   Reply With Quote
Old 11-14-2014, 10:57 AM   #9
Thinks s/he gets paid by the post
sengsational's Avatar
 
Join Date: Oct 2010
Posts: 3,849
Quote:
Originally Posted by Corporateburnout View Post
So if you don't decline COBRA and you had a claim during the 60 days wouldn't paying the premiums disqualify you for the subsidy for the remainder of the year? Would you then continue to pay the COBRA rates for the year?
Yep. You'd be stuck with COBRA if you made a claim after your employee COBRA ran out (in my case, my last day of work).

So you'd need to do some quick thinking if you had something happen in those 60 days. Hospitalization, yep, pay the COBRA bill. Need a script for poison ivy in those 60 days? Pay cash at the doc in the box.
__________________
sengsational is offline   Reply With Quote
Old 11-14-2014, 12:53 PM   #10
Recycles dryer sheets
 
Join Date: Nov 2014
Posts: 381
By the way, the exchange website now shows all of the 2015 plans (at least for TX). You can't sign up yet, obviously, but prices and features are there.
__________________

__________________
big-papa is offline   Reply With Quote
Reply

Tags
cobra insurance aca


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Can you change coverage when starting Cobra? John Galt III Health and Early Retirement 4 12-13-2010 01:50 AM
CAn anyone advise on post-COBRA coverage in AZ DWPC Health and Early Retirement 4 03-18-2010 11:42 AM
To COBRA or not to COBRA~ mickeyd Health and Early Retirement 1 09-04-2009 09:22 PM
Need opinions on coverage risks and COBRA Surfdaddy Health and Early Retirement 5 09-17-2007 12:05 PM
A few more simple questions, COBRA, foreign coverage teejayevans Health and Early Retirement 18 05-03-2007 11:32 PM

 

 
All times are GMT -6. The time now is 07:43 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2017, vBulletin Solutions, Inc.