Beware COBRA to Individual Health Insurance GAP

[Grigori]

COBRA to Individual HI GAP

I just found an unexpected health insurance gap when I applied for an individual health insurance policy this week. If someone has other ideas, let me know, but the only way I found to fill my gap was to buy short term insurance.

Thanks, Greg



* My COBRA insurance expires 6/10/2016.
* I am in Texas.
* I called both Blue Cross/Blue Shield and United Healthcare - both only allow starting ACA qualified health insurance the first of the month AFTER Cobra ends. So, insurance would start 7/1/2016, and I'd have a gap of 20 days.
* My only option is to buy a short term plan from United healthcare that does not cover pre-existing conditions, and is not ACA compliant. This is what I did. It's a good thing that I don't have an ongoing heart, diabetes, or cancer treatment. I'm lucky there! Any pre-existing condition expenses in that 20 day period would not be covered.

If I had this to do over with, I would have cancelled my COBRA effective the end of 2015, and started an ACA plan the first of 2016. That way I wouldn't have had this gap I had to fill.

 

[littleb]

Your Cobra coverage should be administered exactly like the health plan you were covered under during you or your spouse's employment. Most plans terminate the coverage the end of the month but it depends on how the Summary Plan Description is written. Termination of employment in most cases covers you until the end of the month. Other qualifying events (divorce, child reaches a certain age) might terminate on the actual date.

Did you check with your HR department or employer to make sure your COBRA termination date is on the 10th? The gap situation seems like a grey area that nobody thought about. However, the ACA plan was written and passed by politicians.

 

[CoolChange]

Could you have left the USA for vacation during the gap period and bought travel health insurance? This is also a short term insurance policy; but, it might have been cheaper than getting coverage in the USA.

I'm not sure if this would have worked in your situation since I have not researched it recently. But, I did look into something similar a few years ago when the prospect of being abroad for several months at a time was being considered.

 

[Options]

This makes no sense. The COBRA law was passed to eliminate situations exactly like this. It's likely your assumption that your coverage ends on the 10th is incorrect, and I suggest checking with your past employer or COBRA administrator before taking any action. I know of no employer insurance that doesn't terminate at the end of any given coverage month.

 

[jim584672]

I thought that expiration of COBRA created a Special Enrollment Period and the ability to buy a policy off the Marketplace. Also policies are for full months. Something doesn't add up.

 

[rodi]

I had the same situation... Somewhere in one of the many budgetary tweaks they'd changed our health insurance from ending at the END of the month to ending on the last day. COBRA specifically says 18 months - not 18 months plus a partial month. Up until 2 years before I retired, the insurance lasted till the last day of the month that you terminated in....

Unlike Grigori, I made the switch at the end of the calendar year from COBRA to ACA. But if I hadn't - my insurance would have ended mid-month. Actually, I continued dental on COBRA - and had to work with our dentists office to get everything in submitted prior to the end of COBRA dental.

There is no rule/law that says insurance from an employer lasts till the end of the month. It used to be customary.... but it's a way companies can save a few pennies - so they are switching over.

 

[Options]

I had the same situation... Somewhere in one of the many budgetary tweaks they'd changed our health insurance from ending at the END of the month to ending on the last day. COBRA specifically says 18 months - not 18 months plus a partial month. Up until 2 years before I retired, the insurance lasted till the last day of the month that you terminated in....

Unlike Grigori, I made the switch at the end of the calendar year from COBRA to ACA. But if I hadn't - my insurance would have ended mid-month. Actually, I continued dental on COBRA - and had to work with our dentists office to get everything in submitted prior to the end of COBRA dental.

There is no rule/law that says insurance from an employer lasts till the end of the month. It used to be customary.... but it's a way companies can save a few pennies - so they are switching over.

You're exactly right, and you know, I figured as much. You had one cheap employer. Saving money on the backs of its employees. More than anything, seeing employees treated unfairly contributed to my decision to retire, as I saw enough of it to last a lifetime.

 

[user5027]

Can you buy a policy for the month on the open market?

 

[cyber888]

Base on my research, it's more economical to end Cobra at the end of the year (Dec. 31st), and get ACA effective January 1st, especially if you have a high salary the year you left employment, and you have unemployment the following year.

What happens is that you'll get ACA penalty without the Cobra, but if you are unemployed the following year or will only have partial employment - it's best to get ACA for a lower subsidized insurance rate.

 

[pb4uski]

First, double check to be sure that your coverage ends on other than the end of a month... strange in my experience but it could be.

Tell them that your COBRA ends on 5/31/2016.

 

[Texas Proud]

This makes no sense. The COBRA law was passed to eliminate situations exactly like this. It's likely your assumption that your coverage ends on the 10th is incorrect, and I suggest checking with your past employer or COBRA administrator before taking any action. I know of no employer insurance that doesn't terminate at the end of any given coverage month.

Since I did the buying of health insurance for the last company I worked for, I can tell you that the termination of health insurance on the last day of employment IS an option...

Think about it... an employee is paid on the 15th and end of month... he quits on the first day of a month... the company does not withhold any money to pay that months insurance... so, they want to cancel him ASAP...

 

[big-papa]

Base on my research, it's more economical to end Cobra at the end of the year (Dec. 31st), and get ACA effective January 1st, especially if you have a high salary the year you left employment, and you have unemployment the following year.

What happens is that you'll get ACA penalty without the Cobra, but if you are unemployed the following year or will only have partial employment - it's best to get ACA for a lower subsidized insurance rate.

That's exactly what I did. I only spent a few months on Cobra, primarily because I wasn't quite ready to FIRE (was looking for a new job) and because the previous company paid a month or two of it. Plus there was an expense for my daughter coming up that was a lot cheaper out-of-pocket on my employer's plan than it would have been on any ACA plan I looked at.

Regardless of that, I ended my Cobra on the last day of the year and the ACA plan started on the first day of the year - no gaps to deal with.

 

[MBSC]

Tell them that your COBRA ends on 5/31/2016.

If you are purchasing an off-exchange ACA compliant plan outside open enrollment, you are required to provide the new insurance company with "The letter from your COBRA administrator or prior carrier with the date your coverage ended and the reason why" within the time period specified. The state and federal exchanges are required to collect the same document for on-exchange plans.

Voluntarily ending COBRA early does not create a Special Enrollment Period (SEP). You can voluntarily end COBRA during the ACA annual open enrollment period and start an ACA compliant plan in January. Everyone I know has done this to avoid having to meet two separate deductibles during the year.

 

[pb4uski]

Yeah, I guess that wouldn't work.

I wonder if the OP could talk with the former employer about extending COBRA (not sure if they can or not) to 6/30/16 (no gap) or to 1/10/17 (OP can use open enrollment).

In any event, Congress should put a fix in place where someone can purchase an ACA policy that begins the first day of the month that their COBRA coverage expires if their COBRA coverage ends on a day other than the end of a month. That "should" be simple.

 

[CRLLS]

Don't forget to cancel your short-term policy on the day your ACA policy starts. You should get a refund for the unused days. That is what we did last year.