Cobra vs ACA

[hopeisnotaplan]

I have a decision coming up during open enrollment.

Old Mega is currently paying 100% of my Cobra thru end of Jan 2019. Then, I have the choice to continue Cobra thru Nov 2019. (18 months after I left). Or, I can go with ACA for all of ‘19. I’ll be on the MAGI cliff. So close that I can’t be sure if I can stay under or not. The old Mega (and my Cobra option) is moving to a High Deductible plan and I’d pay about $900 month in premiums. No kids. If I were sure I could get the subsidy, the math works a lot better to go ACA and just orphan that free month of Mega paid premium in January. As far as the coverage comparison, it seems about a wash.

I don’t know if it’s even possible to do Cobra thru January and get the free month from Mega then move to ACA. That would be clumsy at best and I’d be starting a new deductible cycle with any January costs being throw away toward the deductible. (I think)

I’m probably missing something as I evaluate this but I’m just starting to wrap my head around it. Any input or variables I maybe haven’t thought of are welcome.

 

[Dtail]

Based on 2018 rates, what would be your estimated ACA costs just under the cliff vs. over the cliff? On Nov 1st, you can calculate 2019 rates with subsidies.

 

[hopeisnotaplan]

Based on 2018 rates, what would be your estimated ACA costs just under the cliff vs. over the cliff? On Nov 1st, you can calculate 2019 rates with subsidies.

Under would give me about $1100mo subsidy so roughly $200 vs $1300 on premiums. Total out of pocket estimate is a little tricky. We’re unpredictable on volume of medical visits, but I’m guessing about a wash on coverage costs after premiums.

 

[njhowie]

I don’t know if it’s even possible to do Cobra thru January and get the free month from Mega then move to ACA. That would be clumsy at best and I’d be starting a new deductible cycle with any January costs being throw away toward the deductible. (I think)

In your situation, you could begin on ACA anytime you like as leaving the employer plan is a qualifying event allowing you to sign up after the enrollment period and begin after Jan 1.

Something else you may consider in your decision making - if you will be going ACA and it will be high deductible, remember you can fund a HSA and those contributions are tax deductible.

 

[Aerides]

My cobra continues thru Feb, but I'm swapping to the ACA for 2019. My income in 2018 is going to be over the cliff, by design, as we sold some older equities now to clear out and take the income this year before we have to watch so closely, so for 2019 I'm going to estimate $63k and we'll likely come under.

I agree staying and swapping after 1 month sounds silly, but if you prefer cobra till November it's worth it. Some considerations for you besides cost (and you might not know these till ACA enrollment opens on 11/1 so you can view 2019 plans).

Can you stay with the same docs/hosps, on the ACA plan (or do you care?)
Are you a big HC consumer? (your expenses in one plan would NOT count toward your annual deductible/minimums in the 2nd plan, if you switch during the year, as you mention, even if you stay with the same provider. It's all about the plan)
How long till Medicare? Would staying till next Nov give you only a short bridge to hop over?
You could also look at staying on Cobra, and then flipping to a short term plan instead of the ACA in Jan or Nov, then re-looking at ACA for 2020. But do look carefully into those plans, they are called "swiss cheese" for a reason as some have quite a lot of exclusions and extra pays.
Either way, look closely at things Cobra gives you in case you need a last minute doc visit (eye doc, etc.) that isn't covered under the ACA plan.

 

[njhowie]

You could also look at staying on Cobra, and then flipping to a short term plan instead of the ACA in Jan or Nov, then re-looking at ACA for 2020. But do look carefully into those plans, they are called "swiss cheese" for a reason as some have quite a lot of exclusions and extra pays.

Not all states provide/allow the short term plans. Additionally, it's best to equate the short term plans as "catastrophic coverage" because:

1. They need to be renewed every 90 days (a new application/policy every 90 days).

2. The deductibles/limits are valid during the policy period. This means for the policy to begin kicking in with no more out of pocket costs for a covered claim, you have to meet that deductible every 90 days and those deductible levels are quite similar to traditional insurance annual deductible levels...think $2500/$5000/$10,000.

These plans are best for younger folks who are healthy and not likely to have medical expenses and simply need coverage if they get hit by a car. They do not cover pre-existing conditions, do not have any prescription reimbursement, and really only pay in the catastrophic situation.

We do this for our early-20s daughter who is living in a state which offers them. We've been going this route for a few years now as the premium has been between $65 and $80 per month - which is for a plan with better coverage, some can be had for $30-$50 per month. When we did it the first year, we were quite surprised when the plan did cover physical therapy...which was likely put in there figuring it would be associated with a catastrophic event requiring rehabilitation. Surprisingly, she was able to use it for sports physical therapy. Whenever she has any medical issues, she's been well trained in her avenues in priority order: 1. CVS MinuteClinic, 2. Urgent Care, 3. Emergency Room. She's used the MinuteClinic on average about twice a year and it is an excellent cost effective alternative for self pay folks. Best part - you are already there should you need any prescriptions.

All that being said, I would not recommend the short term policy for any adult who is not in excellent health, wants to be covered to see their personal physician, have drug coverage, or any of the "amenities" which ACA or other traditional insurance plans provide.

 

[hopeisnotaplan]

Something else you may consider in your decision making - if you will be going ACA and it will be high deductible, remember you can fund a HSA and those contributions are tax deductible.

Something I hadn’t considered. That’s why I come here!!! Thanks...I’ll add to the equation.

 

[GalaxyBoy]

If you decide to leave COBRA early outside of open enrollment, you have to wait for the next open enrollment period to enroll in a marketplace plan.

More detailed information available here:

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

 

[hopeisnotaplan]

If you decide to leave COBRA early outside of open enrollment, you have to wait for the next open enrollment period to enroll in a marketplace plan.



More detailed information available here:



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

The way I read this...I could drop Cobra and pick up ACA outside the open enrollment because my former employer will have stopped contributing to my plan as of Jan 31. That’s a change of status.

 

[MBSC]

The way I read this...I could drop Cobra and pick up ACA outside the open enrollment because my former employer will have stopped contributing to my plan as of Jan 31. That’s a change of status.

While Healthcare.gov says loss of COBRA subsidy creates an ACA SEP, nothing in the regulations have been changed to support that. Most importantly, the ACA enrollment system does not allow an ACA SEP for loss of COBRA subsidy.

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.

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, 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 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 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.

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

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/

 

[VanWinkle]

The way I read this...I could drop Cobra and pick up ACA outside the open enrollment because my former employer will have stopped contributing to my plan as of Jan 31. That’s a change of status.

Upon reading the information, I agree with you that the employer contributions ceasing will trigger a special enrollment. I did go from cobra on my DW to the ACA during open enrollment last year. It turned out to be the correct choice. The High Deductible plan and HSA may be the answer to your income cliff problem. Just make sure you can afford the deductible because stuff happens unfortunately.

 

[Smitty700]

HSA

Something I hadn’t considered. That’s why I come here!!! Thanks...I’ll add to the equation.

You have to make sure that you choose an ACA plan that is HSA compliant. Most are not. There's one small print entry on the plan features that indicates this. If you choose wrong, then an HSA cannot be funded.