Cobra - ACA Overlap

[lawman3966]

I'm posting this to expand upon some advice provided in another thread I found. This basically pertains to deciding when to discontinue Cobra coverage, based on the circumstances of the ACA plan signup process.

My ACA/Grouphealth (GH) coverage is slated to begin on Jan. 1, 2016 here in Washington state. However, I do no yet have my insurance card or paperwork for the GH plan. The registration site indicates that coverage is not official until my first payment is received. And I don't have any payment coupons yet.

Discontinuing Cobra (the Fed govt version of it actually called TCC - temporary continuation of coverage) requires that a request to this effect in writing, by mail, by Dec. 31. Given holiday mail slowdowns, this likely requires mailing the request by about Dec. 20th or so.

Based on the above, and some anxiety arising from my first venture into the ACA, I'm inclined to have the Cobra coverage extend until January 31, 2016, thereby providing a one-month period of overlap of the ACA and Cobra.

I've seen sites advise against having any such overlap. Is there any reason NOT to have the above overlap, other than the obvious motivation of avoiding the added expense (which is this case is about $700).

Thanks in advance for any input.

 

[MichaelB]

The overlap may make your overall coverage less, not more, effective. During that month each insurer might, and probably would, define itself as secondary and the other as primary, and therefore refuse to pay a claim. Should you have need for medical care, they both would refuse to pay. Better you choose one or the other and go with it.

 

[ziggy29]

Well, if you can avoid an overlap without a gap in coverage, that's for the better from a coordination of benefits standpoint. Otherwise you'd have both insurers pointing the finger at the other, saying the other should be primary and pay first.

But, if it's inevitable and unavoidable, better to overlap (as short a time as possible) than to have no coverage at all. I'm putting DW on my employer plan for 2016, but coverage doesn't begin until January 9. Her current group plan ends on December 31, so we had to buy a short term catastrophic plan for January to cover those 9 days. Wasn't thrilled about it, but in order to avoid having her "go naked" on coverage for 9 days, it's what we had to do. Hopefully she won't need to use insurance in January.

 

[MBSC]

My ACA/Grouphealth (GH) coverage is slated to begin on Jan. 1, 2016 here in Washington state. However, I do no yet have my insurance card or paperwork for the GH plan. The registration site indicates that coverage is not official until my first payment is received. And I don't have any payment coupons yet.

My insurer allows the following. YMMV.

Call the new insurance company and offer to make the first month's payment by phone. Since you don't have your membership number yet, they will have to verify your identity (SSN, DOB, etc). Then you should be able to provide them your bank account number and routing # from a check. Be sure to get a payment confirmation # and your plan membership number.

 

[spncity]

I was told that if the first bill from the ACA insurance provider has not arrived in the mail, one can call them to see if the bill has been "generated" - and if so - pay by phone.

Guessing - Isn't there a provision in the COBRA paperwork that they cancel you if you don't pay? Less elegant, but you could purposely not pay January and it will go through the process. That or send your cancellation postmarked by Dec. 31 (along with undoing any auto-pay). Others here may have better info.

 

[Theseus]

My ACA/Grouphealth (GH) coverage is slated to begin on Jan. 1, 2016 here in Washington state. However, I do no yet have my insurance card or paperwork for the GH plan. The registration site indicates that coverage is not official until my first payment is received. And I don't have any payment coupons yet.

We went through a similar situation when switching from employer based COBRA to an exchange plan in January 2015, and I paid by CC online as soon as we got the statement with payment instructions - on January 12. I was sweating things a bit too but understood they were likely inundated with the signup process, causing delays.

Discontinuing Cobra (the Fed govt version of it actually called TCC - temporary continuation of coverage) requires that a request to this effect in writing, by mail, by Dec. 31. Given holiday mail slowdowns, this likely requires mailing the request by about Dec. 20th or so.

Are they requesting that you disclose intent to decline coverage? What happens if you don't tell them, but don't pay the premium? Reason I ask is because given the situation we had, I just didn't plan on paying for January COBRA coverage unless there was a need - if I recall correctly there was a 30 day grace period (likely there are variations by plans and state of residence). I suppose that might have put us in the double coverage with both insurers claiming they were secondary, but as far as I was aware there was no given method of declining COBRA continuation other than just not paying for it.

 

[lawman3966]

Are they requesting that you disclose intent to decline coverage? What happens if you don't tell them, but don't pay the premium? Reason I ask is because given the situation we had, I just didn't plan on paying for January COBRA coverage unless there was a need - if I recall correctly there was a 30 day grace period (likely there are variations by plans and state of residence). I suppose that might have put us in the double coverage with both insurers claiming they were secondary, but as far as I was aware there was no given method of declining COBRA continuation other than just not paying for it.

I will call and ask to make sure, but the impression I get from their paperwork is that payments will continue to be due until a fully compliant cancellation request is received.
Failing to pay a payment when due may lead to penalties and interest charges, and attendant damage to my credit rating, which I clearly don't want to have happen.

 

[WestLake]

Speaking of this - what is the optimum time of the year to retire if you want to go the full 18 months of COBRA before the ACA? Do you have to coincide with the open enrollment period?

 

[Theseus]

I will call and ask to make sure, but the impression I get from their paperwork is that payments will continue to be due until a fully compliant cancellation request is received.
Failing to pay a payment when due may lead to penalties and interest charges, and attendant damage to my credit rating, which I clearly don't want to have happen.

Kind of sounds like they may be a bit sharper than the 3rd party benefits manglement provider my ex-employer used. I think the other responses suggesting calling the new carrier and making payment sooner if possible so as to have confirmation of coverage would be worth pursuing too.

 

[MBSC]

Speaking of this - what is the optimum time of the year to retire if you want to go the full 18 months of COBRA before the ACA? Do you have to coincide with the open enrollment period?

June 1st as your last day, but it depends on the employer-based plan.

With most employer-based coverage, if you work on the 1st of the month you are covered for the remainder of the month. You would need to verify with your HR Dept. that your plan works this way. With coverage for June, the next 18 months of COBRA take you through December of the following year.

While the termination of COBRA does not have to coincide with ACA open enrollment, you could face double OOP expenses at other times. For example, if COBRA terminates in April you would have COBRA's OOP expenses for the first part of the year. Then the ACA plan resets the OOP met to $0 and you start over for the remainder of the year. In this case, it may be advantageous to voluntarily end COBRA December 31st and use ACA open enrollment to pick a new plan January 1st.

 

[sengsational]

June 1st as your last day, but it depends on the employer-based plan.

With most employer-based coverage, if you work on the 1st of the month you are covered for the remainder of the month. You would need to verify with your HR Dept. that your plan works this way. ...

My ex-employer didn't let it go the month...they cut it off as soon as I walked. A tough question to ask HR if you don't want to tip your hand.

 

[lawman3966]

Are they requesting that you disclose intent to decline coverage? What happens if you don't tell them, but don't pay the premium? Reason I ask is because given the situation we had, I just didn't plan on paying for January COBRA coverage unless there was a need - if I recall correctly there was a 30 day grace period (likely there are variations by plans and state of residence). I suppose that might have put us in the double coverage with both insurers claiming they were secondary, but as far as I was aware there was no given method of declining COBRA continuation other than just not paying for it.

It turns out that your comment above is closer the right answer than what I wrote earlier. Upon calling the billing entity (the National Finance Center), they told me that I did not have to send a cancellation notice before Dec. 31, to avoid paying for Jan. 2016 Cobra coverage.
It turns out that I can send the cancellation letter during January, but insert a comment to the effect that the cancellation request has an "effective date" of December 31, 2015.

I wouldn't have guessed that one could backdate this type of request, which is why it can be very beneficial to call about stuff like this.

Based on what I was told though, it would not be wise to simply not pay the Cobra premium and otherwise ignore the issue. From what I understood, this approach would fail to cancel the policy, and would simply cause the unpaid premium to be considered to be an unpaid debt.

 

[bingybear]

for me on COBRA, I had 60 days after my termination of employment to have the paperwork and payment into my ex employer. A day late... no coverage. This was not a government employer... so may not apply to your situation.
As I recall for individual ACA, the first payment is done through the ACA site if processed through the ACA site. If your GroupHealth is the name of the insurance company and you did it through the site, check if there is an option to pay there. YMMV

 

[ziggy29]

But, if it's inevitable and unavoidable, better to overlap (as short a time as possible) than to have no coverage at all. I'm putting DW on my employer plan for 2016, but coverage doesn't begin until January 9. Her current group plan ends on December 31, so we had to buy a short term catastrophic plan for January to cover those 9 days. Wasn't thrilled about it, but in order to avoid having her "go naked" on coverage for 9 days, it's what we had to do. Hopefully she won't need to use insurance in January.

Just an update: I received my 2016 plan info and cards in the mail this morning, and I registered for the web portal. In my case they don't seem to care about temporary or short term plans for COB. When I went to enter that DW would have other benefits for January, it only cared about other employer group plans and such (it said not to include any kind of individual policies for COB). So apparently they are OK with being primary over other individual insurance, just not over a dependent's own group coverage. That being the case, I'll just make sure she uses only my group insurance after the 9th and be done with it.

I don't know if all these plans are the same, but if you *must* overlap COBRA and an ACA individual plan, *if* the COBRA plan's provisions are similar (i.e. individual plans don't matter for COB), then maybe there won't be fighting about who is primary, the COBRA plan could be. My new plan in 2016 seems to always consider itself primary for me, and also primary for DW as long as she doesn't have her own employer group coverage (or Medicare).