Parting Ways With the Megacorp and the ACA - Coverage Gap?

[sengsational]

It's been typical, from what I've heard, that even when a megacorp no longer desires an employee's services, they get at least two weeks of continued treatment as an employee. The employee may get walked to the door, but still is "on the books" for a couple of weeks, meaning they still have the company health care. But as the megacorps have gotten meaner and leaner, I've heard of cases where they walk you to the door on a pay day and that's your last check.

Say that pay day was the 16th of the month, and you are made aware that is your last paycheck, also on that day.

You run right home and, now that the healthcare.gov site works perfectly (at this imaginary termination date in the future), sign up for a policy. You don't want the COBRA coverage since it's too expensive, and if you get on that treadmill, you can't get off it until it runs out or you hit an open enrolment period (according to ACA rules, as I understand them).

So is it true that you will be without insurance coverage for the rest of the month, plus the entire next month? This would be due to missing the mid-month payment for the policy, and all policies start on the first of the month.

Although the gap is less than 60 days, it's still 45 days where you may need to go to the doctor, or have an ongoing treatment continued. What does the ACA law say about this situation, if anthing?

 

[ziggy29]

Most employers pay for health insurance coverage by the month, so *usually* when you are terminated, your health coverage runs to the end of the month. For example, I was told on April 2 that I was being laid off on April 5, but had Megacorp coverage through April 30. That meant I had to figure out my health coverage starting on May 1 through the end of 2013, at which time ACA would kick in.

For me, COBRA would have cost over $960 a month for my wife and I (and it's now $1046 for 2014 in COBRA open enrollment!), so I purchased a short-term/temporary policy from BCBS for $320 a month. All I needed was to bridge the gap between Megacorp coverage and the ACA rollout on 1/1/2014. So I would say in the worst case, if you lost Megacorp coverage before 1/1/2014 you can probably get short-term coverage until that date assuming you don't have a disqualifying pre-existing condition. And because of ACA you won't need to worry about temporary policies not being "creditable coverage" per HIPAA. And even if you had pre-existing conditions that disqualified you from individual or short-term coverage, a month or two of expensive COBRA probably won't kill your long-term finances and it becomes a non-issue on January 1.

 

[Sarah in SC]

You can do Cobra month-to-month, so a month's worth while you shopped for a plan would be pretty reasonable.

 

[sengsational]

You can do Cobra month-to-month, so a month's worth while you shopped for a plan would be pretty reasonable.

I was confused by this:

I have COBRA and am finding it difficult to afford, but Open Enrollment is over. Can I drop my COBRA and apply for non-group coverage outside of Open Enrollment?

No, voluntarily dropping your COBRA coverage or ceasing to pay your COBRA premiums will not trigger a special enrollment opportunity. You will have to wait until you exhaust your COBRA coverage or until the next Open Enrollment (whichever comes first) to sign up for other non-group coverage.

That made me think if you get on COBRA, you can't get off until the next open enrollment. But the fact that you left the megacorp DOES generate a trigger for a special enrollment opportunity, certainly. So it seems that COBRA, in this case, is safe to use!! That does make it easier than shopping for a short-term policy. Thanks!

 

[Sarah in SC]

I know this just because I've used it for a few months while fidgeting around [-]waiting for Godot[/-] waiting for the health care website to work.

Any month I quit paying, we get kicked off. Pretty simple. I've also in the past used a short term policy to keep the continuous coverage, when we quit work to go sailing for 3 months.

 

[ziggy29]

So it seems that COBRA, in this case, is safe to use!! That does make it easier than shopping for a short-term policy. Thanks!

It is easier to just take COBRA. In my case, though, it cost about 3x as much for similar coverage (roughly Silver level in today's parlance). That said, if the cost difference isn't huge, for only a month or two until 1/1/2014 it might not be worth the hassle to open a separate short-term policy. But in my case, more than $600 a month difference for 8 months was sufficient motivation to eschew COBRA.

 

[sailor]

Also keep in mind that you have 60 days to sign up for COBRA either from the end of coverage (end of the month typically) or receiving COBRA letter.
Since tomorrow will be less than 60 days before 1/1/2014, if you were to loose the health coverage, you could sign up for COBRA only in case of serious medical problems before New Year. After that, ACA would cover you (if you signed up of course).
http://www.dol.gov/ebsa/faqs/faq-consumer-cobra.html

 

[ziggy29]

Also keep in mind that you have 60 days to sign up for COBRA either from the end of coverage (end of the month typically) or receiving COBRA letter.
Since tomorrow will be less than 60 days before 1/1/2014, if you were to loose the health coverage, you could sign up for COBRA only in case of serious medical problems before New Year. After that, ACA would cover you (if you signed up of course).
http://www.dol.gov/ebsa/faqs/faq-consumer-cobra.html

That is a very good point, and one I had forgotten about (which is odd, seeing as I recently went through it after my layoff). This technique can be playing with fire, but if you lose Megacorp health insurance with less than 60 days remaining in 2013, you could just sign up for a policy under ACA starting 1/1/2014 and if a significant medical event comes up between now and then, you can retroactively take COBRA within 60 days, make the retroactive premium payments, and you are covered. If nothing happens between now and January 1, you've saved the money that would have been spent on premiums.

So in reality, with exactly 60 days remaining in 2013, someone who loses Megacorp coverage any time between now and the rest of this year can do this. But it's not for the faint of heart and, as I said, it can feel like playing with fire -- especially for the next week or so in case there are delays in getting your COBRA coverage secured.

 

[Sarah in SC]

That is a very good point, and one I had forgotten about (which is odd, seeing as I recently went through it after my layoff). This technique can be playing with fire, but if you lose Megacorp health insurance with less than 60 days remaining in 2013, you could just sign up for a policy under ACA starting 1/1/2014 and if a significant medical event comes up between now and then, you can retroactively take COBRA within 60 days, make the retroactive premium payments, and you are covered. If nothing happens between now and January 1, you've saved the money that would have been spent on premiums.

So in reality, with exactly 60 days remaining in 2013, someone who loses Megacorp coverage any time between now and the rest of this year can do this. But it's not for the faint of heart and, as I said, it can feel like playing with fire -- especially for the next week or so in case there are delays in getting your COBRA coverage secured.

That was confusing to me as well, but what you say is exactly what I learned. I saved myself money before on that one at an old job.

 

[ziggy29]

That was confusing to me as well, but what you say is exactly what I learned. I saved myself money before on that one at an old job.

There is one more very critical piece of information to make this strategy work:

I should also add that if someone goes this route, they should NOT actively decline to take COBRA. They should just do nothing. If you actively decline coverage under COBRA, your 60-day window to take it immediately slams shut and can't be reopened. If you actively decline COBRA and the next day you are hit by a train, you are screwed (and not just physically).

In reality, no one should ever actively decline COBRA. There's no reason to do so, and after 60 days of non-action you are deemed to have "passively" declined it anyway.

 

[bamsphd]

I quit, and my last day was Thursday June 6th this year, which is also the last day my megacorp insurance covered me.

It took what seemed like forever to receive my COBRA enrollment packet and after reading the packet I very promptly sent my first premium check which ended up being pro-rated to cover the rest of June.

My motivation for promptly sending the check was simple. As far as any provider was concerned, I did not have any insurance during the gap. So yes, COBRA will retroactively cover you back to the termination of insurance date. However, you will need to convince providers to treat you without insurance in the meantime, and may encounter some hassles resolving billing questions during the retroactive coverage period.

I retired planning on using COBRA to bridge the family to ACA coverage, so avoiding those hassles was easily worth a month or two of interest.

 

[Notmuchlonger]

In a similar boat. My DW has an early retiree healthcare program. Basically lets you buy at cost a bit less than cobra. Using it till we can get the healthcare.gov site working for us. Like Sarah said if you don't pay that's its. So we will be paying for awhile till things get fixed.

 

[Texas Proud]

I would be careful with the insurance.... where I worked, they took you off the DAY you left... the insurance company would give a credit back for any paid premiums....

 

[ziggy29]

I would be careful with the insurance.... where I worked, they took you off the DAY you left... the insurance company would give a credit back for any paid premiums....

You really do need to check with HR. Your "walking papers" should tell you when your last day of coverage was. For some things, my last day of coverage was the day I was whacked. For others, it was the end of the month.

Assume nothing.

 

[sengsational]

Thanks, all, for laying out that COBRA strategy. I love collective knowledge here.

To apply this to the conditions of the original post:

Say that pay day was the 16th of the month, and you are made aware that is your last paycheck, also on that day. [Edit: say your last day of employee coverage is the 16th too, when it rains, it pours!]

You run right home and, now that the healthcare.gov site works perfectly (at this imaginary termination date in the future), sign up for a policy.
[Edit: the policy will not start until about 1.5 months from your termination date since ACA policies need to be locked in by the 15th in order to start on the first of the next month]

If we also presume that you rarely use healthcare services, all you need to do is sit on the COBRA election letter. If you happen to need significant medical services in the 45 days (before your ACA policy kicks-in), you make the election to go with COBRA and you're covered. You may have a little wrestling contest, but the law will be on your side. If no medical services are required (the likely scenario), you just let day 45 roll around and you'll be covered under the ACA policy you signed-up for on the day you got whacked.

And if you got whacked before the 15th of the month, you would have a much shorter period of having to 'float' with the unanswered COBRA letter (the 45 days is the worst case scenario, but still ok since it's less than 60 days). Brilliant!

 

[Texas Proud]

You really do need to check with HR. Your "walking papers" should tell you when your last day of coverage was. For some things, my last day of coverage was the day I was whacked. For others, it was the end of the month.

Assume nothing.

Well, I did HR before I got whacked.... and we did not give any paperwork... very small company....

 

[zedd]

I know what you are going thru. I parted ways with Megacorp on Oct 25th. My HS ran thru the end of October. I'm still waiting on my COBRA package.

The extra complication for DW and I was getting her signed up for Medicare part B, Medigap and prescrption plan ASAP.

We have the option of including her on my COBRA plan if the Medicare coverage doesnt kick in soon enough. Medicare says shes enrolled but havent seen anything in writing yet.

Definately dont like the feeling of not being covered