ACA guidance wanted. Retiring at the end of the year

[jjflyman]

My DW is going to retire this fall. I have been out of the workforce for a couple years now.
Our plan is for here to retire at the end of October or first part of November. She will be 59 and I will be 60. here is what we are thinking:

1) sign up for ACA after quiting her job during open enrollment.
2) ACA insurance will start Jan 1, 2020
3) because we have 60 days to "decide" to take COBRA, we
will be able to sign up for that if something happens and we
need the insurance between her quit date and when ACA
starts.(my understanding is the COBRA would be retroactive
back to the day she quit, even if we sign up later in the 60
day sign up period)
4) plan our income in 2020 to keep it under the subsidy cut off

Am I on track with my thought? can COBRA be used as a stop-gap like this? Is there a better strategy?
Any advice would be appreciated.

[MichaelB]

One thing your DW should verify with HR is if the employer health care coverage ends the last day of work or the last day of the month she stops working. If it’s end of month, and she leaves early November, she may not need new coverage until Dec 1.

[Dtail]

Your plan sounds good to me. Must always have some insurance.
Playing the MAGI managed income game for subsidies is the way to go for now at least.

[Sarah S]

If your insurance through employment were to end 10/31 there are 61 days between then and January 1. Pick a retirement date that gives you coverage for November 1. Odds of being fine for 1 uncovered day are excellent but why risk it?

[footenote]

Timing: The end of your wife's employment/benefits is an ACA "qualifying event," so you can get ACA coverage without waiting until Jan 1. You can do it the way you outlined, of course.

(+1 to Michael B's advice to check exactly when DW's coverage actually ends.)

Eligibility: Having COBRA available does not disqualify you from enrolling in ACA if you don't take COBRA. Double-check to ensure starting COBRA doesn't then disqualify you from switching to ACA Jan 1.

There could be an "If you start COBRA, you have to exhaust it before you can start ACA" rule. Call your state ACA exchange to understand the details of your options.

Cost: Since COBRA rates = your cost + employer's contribution, most ACA plans with even modest subsidy are probably cheaper. So passing on COBRA and going directly on ACA Nov 1 (or whatever the date needs to be) could save you money.

Cheers and happy Class of 2019 Retirement!

[candrew]

Be careful about that 60 day window to elect COBRA coverage. The 60 day clock begins counting down on the date you are offered coverage in writing by your employer, which may or may not coincide with the last day of employment.

[pjm-7]

Another thing to consider with your COBRA coverage for one or two months is have you met your deductibles for this year? If you have, keep the coverage for November and December, the do open enrollment coverage for 2020.

[bingybear]

The scheme usually works.
IIRC you have to have the acceptance and payment in by the 60 days. Not just in the mail.
The biggest catch is if you get incapacitated near the end of the cobra window and can't accept it in time. Likelihood? rare, but possible.

As for under/over cliff or even CRS is dependent upon your long term financial planning.

[PaunchyPirate]

Your plan should work and the advice already given is good. I did pretty much what you are discussing at the end of 2018. I set my last day of employment as December 14. My employee coverage ended that day. I received the COBRA paperwork in the mail around the 20th of December and immediately filled it out and put it in an envelope with a payment check in it. But I did not mail it. I went on a vacation over the holidays out of the country. So I left the letter with my best friend with instructions to put it in the mail if he were notified that I had medical issues and needed insurance while on my trip. Luckily, I did not, so the COBRA was never applied for.

I started the process of obtaining ACA coverage effective January 1 prior to ending employment because in my state (PA), the ACA application must be processed prior to December 15th. So I just set it up to start January 1 and filled out the application knowing that I would not be working on January 1 (even though, I was technically working at the time I filled out the application). If you do it this way, you don't have the burden of proving you are no longer employed. I simply had to say I was not employed. Several of the questions were challenging to know exactly how to answer given the various dates in play and the possible use of COBRA. I thought I answered them in the correct manner such that I would qualify for an ACA subsidy, however, the Healthcare.gov website said I didn't qualify for a subsidy. So I assumed I didn't answer something correctly. I then decided to call the support phone number for Healthcare.gov. I explained my situation to the agent and they quickly changed some of my answers to properly reflect my situation and this opened up the subsidy for me. As it turned out, my response to the questions about whether I had COBRA available to me were the ones that mattered. I had COBRA available to me, but I didn't plan on using it. It wasn't clear how to answer the questions to describe this approach. So the reason for this long story is this... if you're going to use Healthcare.gov, give them a call if you have issues getting what you have in mind. They are very helpful in explaining things and getting it done correctly.

[NXR7]

Quote:

Originally Posted by bingybear ...IIRC you have to have the acceptance and payment in by the 60 days. Not just in the mail.

I was just going to write that.

Also remember that ACA, unless you're a Florida resident, most likely does not cover you outside of your home area unless it's a life-threatening issue. Nationwide coverage ended for almost everyone around 2016. If you're planning to travel you will be without coverage unless something really bad happens.

My COBRA coverage cost is more than ACA but barely, a couple hundred dollars a month. I'm on a high-deductible plan and my work deductibles are fully paid, as another person wrote so I'm staying on COBRA through the end of 2019.

During open enrollment for my ex-employer this year I am going to cut back on the coverage and still maintain nationwide coverage. If I stay on their HDP via COBRA for 2020 I can still contribute to the HSA and better yet, I can use HSA dollars to pay the COBRA premiums, unlike regular healthcare premiums. And Happy Medicare Day arrives before the 18 months of COBRA expires.

Ray

[candrew]

Quote:

Originally Posted by bingybear IIRC you have to have the acceptance and payment in by the 60 days. Not just in the mail.

From the Centers for Medicare and Medicaid website. COBRA Continuation Q & A.

Q16: How long do I have before I have to submit my first COBRA payment?

A group health plan cannot require payment for any period of COBRA continuation coverage earlier than 45 days after the day on which the qualified beneficiary made the initial election for continuation coverage.

So, if one makes their initial election for COBRA on day 59 of the 60 day election period, they have 45 days from that date to make their initial payment.

[Bruceski44]

The COBRA monthly premium was the same as a Bronze ACA package for me, here in CA, so I wish I had taken COBRA for as long as possible instead of ACA. It was a better benefit plan, and something I was already familiar with.

[NXR7]

Quote:

Originally Posted by candrew From the Centers for Medicare and Medicaid website. COBRA Continuation Q & A. Q16: How long do I have before I have to submit my first COBRA payment? A group health plan cannot require payment for any period of COBRA continuation coverage earlier than 45 days after the day on which the qualified beneficiary made the initial election for continuation coverage. So, if one makes their initial election for COBRA on day 59 of the 60 day election period, they have 45 days from that date to make their initial payment.

Wow, nice find. I got bad info from my former employer, the company that administers COBRA for them and from two independent health care brokers then.

Ray