Gap in Health Insurance

[RetireAge50]

I am retiring in October and my employer provided health insurance will end October 31st. I plan to get ACA insurance starting 1/1/2018. What should I do for the last two months of the year?

1. Cobra $1,300/mo.
2. ACA $780/mo.
3. No Coverage $0/month (with option to pay for Cobra if needed)

 

[CardsFan]

I am retiring in October and my employer provided health insurance will end October 31st. I plan to get ACA insurance starting 1/1/2018. What should I do for the last two months of the year?

1. Cobra $1,300/mo.
2. ACA $780/mo.
3. No Coverage $0/month (with option to pay for Cobra if needed)

Do NOT go without insurance. I would COBRA to make it simple. If $1,000 breaks the budget, then you really are not ready to FIRE.

IMHO.

 

[bigcmagor]

In my state, you have 60 days to elect the COBRA coverage. This gives you an opportunity to collect health care billings and determine whether paying for care out of pocket exceeds what you would have paid in premiums. If you would be better off with the insurance, pay the two months premiums and submit the bills. It's basically free catastrophic protection during the 60 day window. Check your plan details before relying on this.

 

[joeea]

I am retiring in October and my employer provided health insurance will end October 31st. I plan to get ACA insurance starting 1/1/2018. What should I do for the last two months of the year?

1. Cobra $1,300/mo.
2. ACA $780/mo.
3. No Coverage $0/month (with option to pay for Cobra if needed)

If you have already done the research and know exactly which ACA plan best meets your needs, then go with that. Might as well save a few bucks.

Otherwise, continue with your current plan via Cobra (assuming you like your current plan). A few hundred bucks extra certainly won't break you.

In addition, remember that plans change every year. Whatever plan is best for the final two months of they year may very well not be best for next year. Do your research again and find out.

 

[sengsational]

Since you have 60 days (by law) to pay for COBRA, all you need to do is not cancel COBRA. If, on 1/1, you have spent little or no money on health services, then you do nothing, and you've saved the premiums for two months. Alternatively, if something bad happens, and you spend "a lot" of money, you simply pay the COBRA and submit your healthcare claims.

 

[euro]

Since you have 60 days (by law) to pay for COBRA, all you need to do is not cancel COBRA. If, on 1/1, you have spent little or no money on health services, then you do nothing, and you've saved the premiums for two months. Alternatively, if something bad happens, and you spend "a lot" of money, you simply pay the COBRA and submit your healthcare claims.

Ordinarily, I think this would make a lot of sense. BUT: given the screwed up state of health care legislation and the toxic political climate, I WOULD NOT DELIBERATELY GENERATE COVERAGE GAPS IN MY HEALTH INSURANCE AT THIS TIME. I know it is unlikely to happen, but increased premiums or disqualification of coverage as a consequence of gaps in coverage has definitely been discussed in congress and these two month may come back and bite you in the butt. Again, probablty not likely to happen, but these are crazy, crazy times!

 

[RetireAge50]

Since you have 60 days (by law) to pay for COBRA, all you need to do is not cancel COBRA. If, on 1/1, you have spent little or no money on health services, then you do nothing, and you've saved the premiums for two months. Alternatively, if something bad happens, and you spend "a lot" of money, you simply pay the COBRA and submit your healthcare claims.

This is what I was thinking. Also the "ACA penalty" for not having insurance is waived if it is only for 2 months.

Obviously only a little money we are talking about but but might as well use it for some nice bicycles or something.

 

[CardsFan]

Ordinarily, I think this would make a lot of sense. BUT: given the screwed up state of health care legislation and the toxic political climate, I WOULD NOT DELIBERATELY GENERATE COVERAGE GAPS IN MY HEALTH INSURANCE AT THIS TIME. I know it is unlikely to happen, but increased premiums or disqualification of coverage as a consequence of gaps in coverage has definitely been discussed in congress and these two month may come back and bite you in the butt. Again, probablty not likely to happen, but these are crazy, crazy times!

+1
And what if something happens on the last day, and you cannot make a change in time?

Would you really risk your entire retirement to save a thousand (or 2) dollars?

 

[Senator]

If you are sure you are going to sign up for insurance on 1/1, have the retro-Cobra for any emergencies.

I do not think any penalties are enforced anymore.

3. No Coverage $0/month (with option to pay for Cobra if needed)

 

[pb4uski]

Since you have 60 days (by law) to pay for COBRA, all you need to do is not cancel COBRA. If, on 1/1, you have spent little or no money on health services, then you do nothing, and you've saved the premiums for two months. Alternatively, if something bad happens, and you spend "a lot" of money, you simply pay the COBRA and submit your healthcare claims.

What he said... but you really have 105 days... you would elect coverage before the 60 day deadline and then would have 45 days to pay the premium... if you don't pay the premium within 45 days then the coverage is cancelled retroactively but if you have not had any claims during that past period or claims were less than the premiums so who cares?

How to Manipulate the System

If you have chronic health problems or require regular medications, and you have the money, you may want to just go ahead and elect your COBRA coverage. However, if you’re fairly healthy and you don’t think you’ll actually need coverage, you can put off making your decision for a while.

As I said above, you have 60 days to respond to your COBRA notification letter. You can wait until the last day, and mail you election form on that date (make sure it’s mailed early enough in the day to have that day postmarked). You then have 45 days to make your payments up to that point and coverage is retroactive to the end of your previous coverage.

If, in that time period, you don’t have any events that need coverage, then you can just let it go if you don’t want to pay for the coverage (or can’t afford to). If the company doesn’t receive your COBRA payment, then they’ll just not enroll you in coverage. However, if you have an event in the 105 day window (60 days notification and 45 for payment), then you can still be covered. So, if you have a car accident on day 100 and end up in the hospital for a day or two, just make sure you pay your premiums by day 105. You just tell the hospital that you have COBRA coverage pending, and they will usually hold charges pending your insurance information. This way you don’t have to actually pay for coverage of those 3.5 months unless it turns out you actually need it.

 

[candrew]

I am retiring in October and my employer provided health insurance will end October 31st. I plan to get ACA insurance starting 1/1/2018. What should I do for the last two months of the year?

1. Cobra $1,300/mo.
2. ACA $780/mo.
3. No Coverage $0/month (with option to pay for Cobra if needed)

I ER'd last year in early November and found myself in the same boat as you. I decided to go with COBRA (your option #3) until the end of the year then enroll in the ACA starting 1/1/17. DW & I ended up not needing the retro COBRA so we merely let the clock run out it.

 

[MBSC]

Since you have 60 days (by law) to pay for COBRA, all you need to do is not cancel COBRA.

Actually, a person has 60 days to elect the retroactive COBRA coverage but you do not send payment with the election. The person is billed separately and has an additional 45 days from election to decide if they want to pay and activate the policy.

If there are no serious medical issues and the OP does not make the initial premium payment, they would need to use the "Short Coverage Gap" ACA penalty exemption as sitting on the COBRA activation is not considered compliant coverage.

The government considers a gap of no more than 63 days to be "continuous coverage". All of the proposed changes continue to use the government definition so as to not impact COBRA elections.

And what if something happens on the last day, and you cannot make a change in time?

That is why I elected COBRA on day 50. Nothing happened the final 10 days so I didn't pay the bill when it arrived and the policy was never activated. It is really a 105 day decision period broken into two parts.

Q8: How long do I have to elect COBRA coverage?
If you are entitled to elect COBRA coverage, you must be given an election period of at least 60 days (starting on the later of the date you are furnished the election notice or the date you would lose coverage) to choose whether or not to elect continuation coverage.

Q15: Who pays for COBRA coverage?
When you elect continuation coverage, you cannot be required to send any payment with your election form. You can be required, however, to make an initial premium payment within 45 days after the date of your COBRA election (that is the date you mail in your election form, if you use first-class mail). Failure to make any payment within that period of time could cause you to lose all COBRA rights.

Reference: https://www.dol.gov/sites/default/f...bra-continuation-health-coverage-consumer.pdf

 

[CoolChange]

For whatever it's worth, I will more than likely be in a similar situation this year and will likely choose "3. No Coverage $0/month (with option to pay for Cobra if needed)" for myself.

Many thanks to pb4uski and MBSC for pointing out the additional 45-day window.

I have played this game in the past (long before ACA, with a much smaller personal net worth) for shorter breaks in coverage and always had my COBRA paperwork filled out along with the appropriate check ready to send just in case something serious happened during the gap. At least two other people had access to this paperwork and the check with instructions to ensure it was mailed immediately if I became incapacitated.

 

[RetireAge50]

Appreciate all the responses as well. Thank you!