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COBRA and timing
Old 01-26-2008, 08:57 AM   #1
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COBRA and timing

As I understand it, when you leave an employer, they have to offer your medical continuation coverage under COBRA. But that's AFTER the fact that you've quit or ER'd. And one wouldn't know the cost under this plan until sometime later.

So how best to time it? Assuming I'm planning on leaving my job, say July 1. Do I have to have my own outside medical insurance lined up to start on July 1? Then sometime later, I get details from my employer about coverage under COBRA, then I decide which one to go with? In theory I could have gone through the trouble of getting other medical insurance for only a month or so, cancel it and take the plan under COBRA.

Or am I making this more complicated than it really is?
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Old 01-26-2008, 09:32 AM   #2
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Check out these COBRA threads in the forum FAQs: http://www.early-retirement.org/forums/f47/buying-private-health-insurance-30756.html#post568449
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Old 01-26-2008, 01:31 PM   #3
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if i remember right, how it worked for me: i left the first week of the month so i was covered under the company group plan for the rest of that month. than cobra kicked in automatically as long as the carrier received a check by the end of the 2nd month. i knew what the cost would be before i quit. what i hadn't considered until late in my cobra use was that had i developed a so-called pre-existing condition during my cobra coverage that i would than have trouble getting private coverage. also a private plan doesn't really kick in for 6 months after you start paying as they'll claim pre-existing for symptoms showing up between signing up and then.

my private coverage has a high deductible but is less expensive than cobra was. in retrospect i should have gone directly from the group plan to a private plan and not used cobra at all. your mileage may vary.
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Old 01-26-2008, 01:35 PM   #4
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Your employer should be able to tell you now what the current COBRA costs are. Of course, if you retire some time in the future those costs might change.
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Old 01-26-2008, 02:14 PM   #5
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Joe once you get over the sticker shock of COBRA I suggest you look at buying insurance before you retire. I purchased the insurance online through ehealth. It started the month before I retired. It was 1/2 as much as the cost of COBRA but I went with a $3k deductible to keep the cost managable. Most states you'll have to fill out a questionnaire and the ins companys can deny coverage if you have health issues. I submitted my aplication in March and was approved in late April with the policy taking effect in June. that way we were not without insurance. Since you are covered presently if you do not have a "gap" in coverage you should have a better chance of coverage.

Please check some of the FAQ's and best of threads on this forum. There is a lot of information about this issue. Good Luck.
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Old 01-26-2008, 03:15 PM   #6
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In theory I could have gone through the trouble of getting other medical insurance for only a month or so, cancel it and take the plan under COBRA.
Not sure that this would work. I used to be the COBRA Administrator for a number of companies and I believe that COBRA coverage must begin the day after your coverage as an employee ends. No gap in coverage. If you had other coverage and then applied for COBRA, I do not believe that you would then be eligible as COBRA is only for those with no other coverage. It is all strictly covered by federal legislation that sets all of the rules that must be adhered to by both sides.

As for COBRA rates, I suggest that you contact the person that administers your company's COBRA plan and ask them what the COBRA monthly rates are for each individual benefit. You will be charged either 100% of the employer's cost or 102% of the cost, depending on whether or not the employer wishes to charge the additional 2% admin fee. Remember that the cost that you will be paying while on COBRA is not the subsidized cost that the employee pays. I had many current employees call me and inquire about the COBRA rates so I recommend that you also do that.
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Old 01-26-2008, 03:31 PM   #7
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As has been mentioned above, the biggest risk for a healthy person is developing a pre-existing condition while on COBRA, and then being unable to get private insurance (other than through HIPAA at a very high rate). Also, since many employer-sponsored plans tend to be of the cadillac variety, they are very expensive to carry when paying the full premium yourself, and in addition to that, the premiums are paid with after-tax dollars rather than pre-tax when you were working.

When I FIRE'd I was able to raise the deductible on my employer-sponsored plan, which cut the COBRA premium very significantly. You may want to check if your plan has that option.
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Old 01-27-2008, 09:17 AM   #8
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Your employer should be able to tell you now what the current COBRA costs are. ..
My wife obtained the COBRA cost by calling her human resources department while she was still employed with the company.
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Old 01-27-2008, 09:39 AM   #9
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I signed up for COBRA at retirement. I checked into it with my retirement coordinator before I pressed the button. He gave me pricing and all the details. I did it because, a clause in the material said that if I took out COBRA, then I and my DW could NOT BE REFUSED for any pre-exisiting conditions for insurance after COBRA. I have other alternatives (like megacorps retiree policies which are higher than COBRA believe it or not) but I did want to make sure that I gave myself alternatives.
COBRA is NOT cheap ... but what health insurance is now a days?
You should learn about and figure out COBRA BEFORE you retire. You do have a grace period after retiring (don't quite remember ... 60 days sounds familiar). IF YOU CAN'T get any outside policies for cheaper, then you should sign up for COBRA.

CAVEAT!: If you get a high deductible policy and later develop a 'condition', and then want to go to a lower deductible policy ... you will probably be denied. So get the lowest deductible that you would want to live with while you are still healthy.
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Old 01-27-2008, 01:24 PM   #10
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If you have a solid retirement date, I think it's best to get private insurance before you retire... start about 4 months ahead because it took me that long to get through a couple of rounds of appeals before I was approved.

At my company COBRA was more or less automatic once I left, and the only way to stop it was not to pay for it. As others have said the important thing is to avoid any gaps in coverage, because it will make obtaining any insurance more difficult and expensive.
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Little known COBRA fact
Old 01-27-2008, 02:34 PM   #11
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Little known COBRA fact

One very important item with COBRA. Here in my state (WA), you must fill out a health history form to purchase your own health insurance. Depending on your health history, this may be a big deal. You might be considered high risk.
At the end of the 18 month COBRA insurance period there is a 30 day window (it's either the last 30 days or the 30 days after COBRA) when you can buy health insurance WITHOUT the health history form. They have to take you!! Any pre-existing conditions remain unknown to the insurance company.
Very important. I had 2 previous strokes, and would have ended up in the high risk pool @ about $1200/month. As it worked out, I'm at $285/month.
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Old 01-27-2008, 07:24 PM   #12
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You can play a little game with Cobra by waiting as long as possible to accept it (30 days?) and then waiting as long as possible to pay the first premium (another 30 days?). If you end up getting insurance before you have to pay the first premium (which would for 60 days?), you can cancel. If you have a large enough medical claim prior to the first premium, pay the premium and take the coverage.

I did this between my old job and my current job and it saved me $2000 as we had no claims and my new health insurance started "in time." If you know you are not going to another job with coverage, I would file my first application for individual health insurance at least 90 days prior to the date your employer health insurance will lapse. Initially, I did not know I was going to get another job (blissfully unemployed) so we were applying for individual health insurance. It was a slow process.
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Old 01-27-2008, 07:26 PM   #13
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lkg4 - Do you have to take the full 18 months of Cobra to have the "don't ask, don't tell" policy work? Can you purchase individual health insurance after the 6th month and have the policy work?
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Old 01-27-2008, 08:19 PM   #14
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It's probably different in every state... I don't think California has that kind of "don't ask don't have to tell" period. While it worked out for lkg4, I would be leary of waiting until 30 days before your coverage lapses to start applying for private insurance.
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Old 01-27-2008, 09:26 PM   #15
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Reply to Buckeye

Buckeye,
In my case, I paid the 18 month of COBRA. I then purchased health insurance. I really don't know if I could have made the purchase earlier
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Old 01-28-2008, 06:02 AM   #16
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I'd like to add a related question since I couldn't find an answer in any related threads. Can Cobra rates change during the 18 month period? If your ex employers rate increases then your rate increases too?
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Old 01-28-2008, 06:19 AM   #17
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Originally Posted by TargaDave View Post
If your ex employers rate increases then your rate increases too?
Yes. When I was covered by COBRA a couple of years ago my monthly premium was equal to what I was paying as an employee + what the company paid on my behalf before I quit + an administrative fee of 2%. When the company adjusted the employees premium at the beginning of the calendar year, my COBRA premium cost went up accordingly.
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Old 01-28-2008, 09:58 AM   #18
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I'd like to add a related question since I couldn't find an answer in any related threads. Can Cobra rates change during the 18 month period? If your ex employers rate increases then your rate increases too?
I think they (the company, ole megacorp), only change the rates at the beginning of the year. So your rate can increase at most, twice in that 18 months. I started mine in July of 07 and in Jan of 08 we got a new rate. I think it went up 10 bucks a month. So at the end of 08, my COBRA expires and I go to megacorps or get private insurance.
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Old 01-29-2008, 01:48 AM   #19
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Thanks. That's just what happened to me 2 weeks ago only the rate increase was 35%. Hard to even believe
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Old 01-29-2008, 03:01 PM   #20
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Can Cobra rates change during the 18 month period? If your ex employers rate increases then your rate increases too?
Group health insurance rates are generally recalculated annually, generally at the same time of year. However, there is not a guarantee that it has to be done that way. It all depends on the policy owner (employer) and his wants, needs and desires.
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