COBRA question

[Conundrum]

My megacorp insurance formally ends July 31 so I have a decision to make. The company will subsidize 50% for the first 6 months then goes to 100% for the remaining year.

Full premium is $1660 / mo. Excellent insurance. Medical,dental,vision,prescription, hearing aids, etc,etc,

My main question is can I go the first 6 months @ 50% then jump to ACA? It appears I will be over the ACA “cliff” this year and likely over in 2019 as well.

I ran a ACA scenario on healthsherpa.com and a silver plan runs $1396 for H & W. (No subsidy)

My FIRE budget for healthcare is $1900/mo including meds,copays,etc.

Hard to know what the ACA premiums will be for 2019 with all the stuff floating around in the news.

 

[Aerides]

Short answer is yes. You can dump COBRA and swap to ACA during the eoy enrollment period. So you can take it now, then decide in November if you want to continue full cobra in 2019 or jump to ACA in January for all of 2019.

It's a no brainer to take it now, since any deductibles won't carry over if you swapped mid-year. I stayed with cobra for the same reasons you mentioned, and also I don't have to worry about finding new providers till it runs out.

edited to correct prior mis-statement.

 

[Lukeee]

Congratulations on your recent ER!!

 

[cathy63]

You can switch from COBRA to ACA under any one of these conditions:
1) ACA open enrollment
2) COBRA ends
3) COBRA costs change because the employer contribution stops

So your switchover dates would be January 1, 2019 for open enrollment; February 1, 2019 for the cost increase; January 1, 2020 for the next open enrollment; February 1, 2020 for end of COBRA eligibility.

 

[GalaxyBoy]

Short answer is yes. You can dump COBRA and swap to ACA at any time as you become eligible once you no longer have insurance.

Incorrect. You can only “dump” COBRA during ACA marketplace open enrollment. However, you can start an ACA policy when COBRA expires even if it’s not during open enrollment.

https://www.healthcare.gov/unemployed/cobra-coverage/

 

[Aerides]

Thanks for clarifying. I was under the impression I could drop cobra voluntarily and go ACA outside of enrollment based on research from 2 years ago but I guess I was wrong!

But, OP can take Cobra now, and then decide during enrollment if he wants to keep it for 2019 or swap to ACA. (I will edit my above post).

 

[CardsFan]

My megacorp insurance formally ends July 31 so I have a decision to make. The company will subsidize 50% for the first 6 months then goes to 100% for the remaining year.

Full premium is $1660 / mo. Excellent insurance. Medical,dental,vision,prescription, hearing aids, etc,etc,

My main question is can I go the first 6 months @ 50% then jump to ACA? It appears I will be over the ACA “cliff” this year and likely over in 2019 as well.

I ran a ACA scenario on healthsherpa.com and a silver plan runs $1396 for H & W. (No subsidy)

My FIRE budget for healthcare is $1900/mo including meds,copays,etc.

Hard to know what the ACA premiums will be for 2019 with all the stuff floating around in the news.

I would carefully consider keeping the COBRA for the full duration. At the very least, compare the deductibles and max OOP, and consider the benefits of the dental, vision, hearing which you will likely lose with an ACA plan.

 

[Lukeee]

Hypothetically using the example above, if the MAGI for 2018 was 150K and the 2019 is estimated to be $40K, would ACA calculate rates /subsidies based on 2018 or 2019 MAGI when enrolling for 2019?

 

[Bestwifeever]

I would carefully consider keeping the COBRA for the full duration. At the very least, compare the deductibles and max OOP, and consider the benefits of the dental, vision, hearing which you will likely lose with an ACA plan.

And I believe once you move off COBRA you cannot go back to it. I was able to stay on it through DH’s megacorp as a retiree’s spouse until Medicare. Even though ACA came into existence then, we decided the extra cost balanced the uncertainty for us.

 

[68bucks]

This presents me something I hadn't considered. I will be retiring completely in October and planned to COBRA through the end of 2018 then consider options for 2019. I never thought about not being able to go off COBRA whenever I felt like it so I need to make that decision during open enrollment. I know I won't be getting any subsidy. Hmm, better revise my thinking.

 

[Dtail]

Hypothetically using the example above, if the MAGI for 2018 was 150K and the 2019 is estimated to be $40K, would ACA calculate rates /subsidies based on 2018 or 2019 MAGI when enrolling for 2019?

2019 for sure, but you will probably have to show some documentation on how you arrive at your estimates.

 

[UnrealizedPotential]

I never did Cobra. It was very expensive. I went with the ACA. I am hoping to at some point get on my old companies retiree health plan. I'm still researching when/if I will be eligible and if it will be worth it to switch. It may/may not be worth it.

 

[GTFan]

Same here, got unsubsidized ACA back in 2015 (was a LOT cheaper then) instead of COBRA because ACA Bronze plan was cheaper than unsubsidized COBRA. Then switched to heavily subsidized Silver ACA plan in 2016 until now, plan on doing same for 2019. This is harder for a new ER to do now because unsubsidized ACA plans are stupid expensive here.

My Megacorp retiree plan is also unsubsidized and therefore expensive, it will only be used as a fallback if the ACA implodes. It's quite a bit cheaper than an unsubsidized ACA Bronze plan now.

 

[Popeye]

2019 for sure, but you will probably have to show some documentation on how you arrive at your estimates.

Can you skip jumping through their hoops and just true it up at tax time? In other words pay full freight during the year and collect subsidy as a refund when you do you taxes the following April? Assuming you stay on the right side of the cliff?

 

[jimbee]

I never used COBRA, signed up for ACA since it was a lot cheaper, and we don't use a lot of medical services. The difference in premium cost was enough to cover the out of pocket max of my ACA plan.

 

[joeea]

Can you skip jumping through their hoops and just true it up at tax time? In other words pay full freight during the year and collect subsidy as a refund when you do you taxes the following April? Assuming you stay on the right side of the cliff?

That is certainly doable.

Of course that equates to giving them an interest-free loan.

 

[joeea]

My megacorp insurance formally ends July 31 so I have a decision to make. The company will subsidize 50% for the first 6 months then goes to 100% for the remaining year.

That's rather generous!

The only times I have used COBRA, I paid 102% immediately.

The most recent time I used COBRA as a bridge to the ACA open enrollment date. Once in the new year, our ACA plan was significantly cheaper than COBRA (even cheaper than what I paid as an employee) due to subsidies and had a much lower deductible for the same coverage.

 

[Dtail]

That is certainly doable.

Of course that equates to giving them an interest-free loan.

+1
Many people do it this way if don't know specifically how much their MAGI will be.
I decide my MAGI for the next year at ACA enrollment time, since it is only related to withdrawing from my TIRA.

 

[Popeye]

+1
Many people do it this way if don't know specifically how much their MAGI will be.
I decide my MAGI for the next year at ACA enrollment time, since it is only related to withdrawing from my TIRA.

If I do go ACA for 2019, I will stay off the cliff but I can’t imagine how I would demonstrate what MAGI will be. It will mostly come from Roth conversions or capital gains during the year.

 

[Dtail]

That is certainly doable.

Of course that equates to giving them an interest-free loan.

If I do go ACA for 2019, I will stay off the cliff but I can’t imagine how I would demonstrate what MAGI will be. It will mostly come from Roth conversions or capital gains during the year.

I have been on ACA for 2 years now. In 2017, I withdrew from my 401k early in Jan and showed the proof. In 2018, I did do a Roth conversion again in early 2018 and showed the proof.

Each year they wanted the proof by late Feb/early Mar. Unfortunately I don't have the experience of how one would prove capital gains upfront (as one can't).

Possibly, you should speak to a supervisor in Healthcare.gov for some advice.
They do respond to questions all year long and you can't be the first example of a capital gains MAGI source.

 

[Splash]

If I do go ACA for 2019, I will stay off the cliff but I can’t imagine how I would demonstrate what MAGI will be. It will mostly come from Roth conversions or capital gains during the year.

For proof, I uploaded a simple spreadsheet I created showing my estimates. I used prior year actuals for dividends, tax exempt interest, and capital gains estimates. I uploaded prior year 1099s as proof. I estimated my retirement plan taxable withdrawals to bring the number up to the MAGI I was planning to hit for the year. I made a note on the spreadsheet that the retirement plan withdrawals were estimated based on what we needed for living expenses. The first year, I also made a note on the spreadsheet that DH and I had retired resulting in a significant reduction in income compared to our prior year tax return. This approach worked for 2017 and 2018 without any questions or issues.

I think simple is best. No need to go into great detail.

 

[jackl]

I think I need to put a safety warning on this:

Canceling your COBRA coverage WILL NOT create a qualifying event to enroll into a ACA Plan.

When the COBRA coverage expires after the 18 months (or however long it lasts in your state,) will, but cancelling it voluntarily after the 6 months of having the company's contributory premiums will not.

You would have to enroll at Open Enrollment if that is your plan.

 

[cathy63]

I think I need to put a safety warning on this:

Canceling your COBRA coverage WILL NOT create a qualifying event to enroll into a ACA Plan.

When the COBRA coverage expires after the 18 months (or however long it lasts in your state,) will, but cancelling it voluntarily after the 6 months of having the company's contributory premiums will not.

The government disagrees with you. They say that canceling COBRA because the employer contribution ends does create a special enrollment period. See the table here: https://www.healthcare.gov/unemployed/cobra-coverage/

Can you change from COBRA to a Marketplace plan?

	If your COBRA is running out	If you’re ending COBRA early	If your COBRA costs change because your former employer stops contributing and you must pay full cost
During Open Enrollment	Yes, you can change.	Yes, you can change.	Yes, you can change.
Outside Open Enrollment	Yes, you can change — you qualify for a Special Enrollment Period.	No, you can’t change until the next Open Enrollment Period, your COBRA runs out, or you qualify for a Special Enrollment Period another way.	Yes, you can change — you qualify for a Special Enrollment Period.

Do you have some other government document that contradicts this info from healthcare.gov?

 

[jackl]

Interesting. I'll have to look into this more thoroughly. We don't use healthcare.gov here in California, so it might be a local thing.

That's a good catch, though.

 

[MBSC]

I'm just going to leave the following information here, FWIW.

If you stop paying your COBRA premium and lose coverage (or if your employer has agreed to pay for a limited time and you do not continue the payments), you will not be eligible for special enrollment through Covered California. You will only qualify for special enrollment if:

1. Someone else responsible for sending your COBRA premium payments (for example, your former employer) fails to do so on a timely basis.
2. You move out of the plan coverage area, and there is no COBRA continuation coverage available.
3. You reach the plan's lifetime limit for benefits.

If none of these reasons apply, you will have to wait until the next Covered California open-enrollment period to cancel your COBRA plan and sign up for a Covered California health insurance plan, unless you have another reason (known as a qualifying life event) for special enrollment.

Source: https://www.coveredca.com/individuals-and-families/special-circumstances/cobra/

Employer Benefits Article:

This position—that loss of an employer COBRA subsidy is not an event that creates eligibility for mid-year special enrollment period (“SEP”) in the Markteplace—is one that has been supported by the available guidance, including the ACA’s regulations regarding SEPs and the Marketplace website, www.healthcare.gov. That is, until late last year...

Around October 2016, practitioners began to notice a change on the Marketplace website. Specifically, healthcare.gov currently provides in a couple of different spots that loss of an employer-provided COBRA subsidy does entitle an individual to a SEP. Notably, however, no change has occurred to the underlying regulations (link), nor has there been any formal communication from any of the agencies that are responsible for administering the ACA acknowledging or explaining this change.

We recently spoke with representatives at Health and Human Services—the folks actually responsible for enrolling people in individual coverage via the Marketplace—who indicated confusion over the change on the website and stated that their enrollment system is still not set up to provide a SEP to an individual in such circumstances. In particular, they noted that the information on the healthcare.gov website is not binding upon them and that they must process enrollments according to the way their system is set up.

We continue to investigate this issue, but in the meantime recommend that employers design their severance packages without any reliance on the idea that a former employee will qualify for SEP when their employer-provided COBRA subsidy ends.

Full Article: https://www.benefitslawadvisor.com/...s-of-cobra-subsidies-a-marketplace-conundrum/