Employment ends, but employer continues to pay premiums?

[LRDave]

I've looked around all AM but have not found a COBRA FAQ that answers my questions.


The end of my employment will be 30-April (Yay!). My employer self-insures and has agreed to pay my health insurance premium through July.


Q: When does the COBRA clock start in this situation?
Q: Is end of employer paid coverage a qualifying event?


TIA.....

 

[stepford]

I was in a similar situation and the "COBRA Clock" was independent of who was paying. Unless there's something unusual about your situation COBRA lasts 18 months after termination of employment, regardless of who pays the premium.

 

[LRDave]

I was in a similar situation and the "COBRA Clock" was independent of who was paying. Unless there's something unusual about your situation COBRA lasts 18 months after termination of employment, regardless of who pays the premium.

Thanks.


The 2nd question is more preying on my mind, as I will likely want to change my coverage after my employer stops paying. I am afraid I won't be able to change if I don't switch immediately after termination.

 

[stepford]

In my case there was no problem going from COBRA to BCBS after 3 months. This was, however, a retiree medical program subsidized by my former employer. I would think the same would be true for any insurer you choose, but check with your HR department just to be sure.

 

[CRLLS]

IIRC, you can change to an ACA plan during any open enrolment period. This is usually in Nov(ish) and coverage takes effect on Jan 1st the following year. If you choose Cobra, you would be on the hook for Cobra premiums Aug thru Dec.

 

[Jerry1]

I believe that you cobra starts after the employer stops paying your premium. Basically, it starts once your coverage ends. Of course this is typically the same date as when employment ends, but in your case it will not be. I had the same basic situation. I had a severance package that provided one year of medical insurance. When that coverage ended I was moved over to retiree healthcare where I pay the premiums. However, I got my cobra letter shortly after my severance time ran out, not when I stopped working. And yes, my employment was terminated. I was not somehow left on payroll in order to make this happen.

 

[Aerides]

You will want to get confirmation in writing from your HR, but from what you've described, your employer-continued coverage through EOM July would work the same as if you are employed. The end of employer-continued coverage would then work as a qualifying event.

You could then take and keep Cobra for the 2nd half of the year, or go ACA right away. Remember, if you go cobra, then your medical expenses toward your deductible still count whereas they would not if you go ACA (even if you go with the same provider). Also, the ACA plan you pick for 2H19 may not be available for 2020, so you'd be stuck changing docs twice in 6 months - worst case.

 

[MBSC]

The 2nd question is more preying on my mind, as I will likely want to change my coverage after my employer stops paying. I am afraid I won't be able to change if I don't switch immediately after termination.

While Healthcare.gov says a person qualifies for a Special Enrollment Period (SEP) when the employer stops paying COBRA premiums, the underlying regulations do not support this and the reps have no way of coding a SEP for that reason. You can read more in this thread:
http://www.early-retirement.org/forums/f38/cobra-vs-aca-94432.html#post2131320

In addition:

9. How does COBRA coverage interact with marketplace exchange coverage?

Enrollment in marketplace coverage is limited to the open enrollment period and to situations of special enrollment. Termination of employment creates a special enrollment right, as does the end of the full 18-month COBRA period. Terminating COBRA prior to the end of the 18-month period simply because an employee does not like the coverage or because an employer-provided COBRA subsidy has ended, however, does not create a special enrollment right.

Reference: https://www.lexology.com/library/detail.aspx?g=6b0ed805-cf6b-4f2b-8979-1c1572703e9a

The loss of subsidized COBRA does not allow the employee to elect other employer coverage or ACA exchange coverage. Therefore, unless the end of the subsidy just happens coincide with beginning of a plan year under another plan, Kevin and Winnie will not be able to elect other coverage when the subsidy period expires.

Reference: https://www.hubinternational.com/pr...s/compliance-bulletins/2018/11/cobra-subsidy/

 

[Spock]

On my 18 month COBRA there were 3 potential special qualifying events that would have allowed a SEP on healthcare.gov.
1. Initial termination of employment and start of COBRA at employee rate.
2. 12 months into COBRA, my premiums stepped from employee rate to the 102% of cost rate (you pay 100% of the employers cost of coverage plus a 2% admin fee).
3. End of COBRA at 18 months.
I also could have moved during any of the regular November open enrollment periods.

I moved from COBRA to ACA after 12 months at the 7x cost increase at #2.


The transition was a bit bumpy waiting for ACA to confirm I qualified for the SEP, so coverage ended up overlapping for 1 month. Which in-turn caused a mess on the 1095 for calculating the PTC. I wrote a letter of explanation with my tax return and am now waiting for the audit window clock to expire.

 

[big-papa]

You will want to get confirmation in writing from your HR, but from what you've described, your employer-continued coverage through EOM July would work the same as if you are employed. The end of employer-continued coverage would then work as a qualifying event.

You could then take and keep Cobra for the 2nd half of the year, or go ACA right away. Remember, if you go cobra, then your medical expenses toward your deductible still count whereas they would not if you go ACA (even if you go with the same provider). Also, the ACA plan you pick for 2H19 may not be available for 2020, so you'd be stuck changing docs twice in 6 months - worst case.

Yep, that's basically the question. Is your employer paying for Cobra through July or are they just directly keeping you on their insurance plan as if you're employed through July?

 

[LRDave]

Yep, that's basically the question. Is your employer paying for Cobra through July or are they just directly keeping you on their insurance plan as if you're employed through July?

Yes, they keeping me in the plan as if employed.


Thanks for all the inputs to my question. I appreciate it.

 

[tbbarton]

Thanks.


The 2nd question is more preying on my mind, as I will likely want to change my coverage after my employer stops paying. I am afraid I won't be able to change if I don't switch immediately after termination.

Can’t change the coverage with the existing provider until and open enrollment period

 

[audreyh1]

I think you have 60 days to elect Cobra. Sorry I do t know what exactly starts the 60 day clock.

 

[Spock]

Can’t change the coverage with the existing provider until and open enrollment period

I don't think this is correct. Major price changes in COBRA coverage (such as ex-employer subsidized to full ex-employee pay) creates a special enrollment opportunity.

 

[gauss]

Would you qualify for an ACA subsidy aka. Premium Tax Credit (PTC)? If so, wouldn't ACA be a better value than COBRA?

-gauss

 

[Smitty700]

I don't think this is correct. Major price changes in COBRA coverage (such as ex-employer subsidized to full ex-employee pay) creates a special enrollment opportunity.

Healthcare.gov agrees with you.

If your COBRA costs change because your former employer stops contributing and you must pay full cost...you can change — you qualify for a Special Enrollment Period.​

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

 

[Murph]

Can’t change the coverage with the existing provider until and open enrollment period

I FIREd this year. When the COBRA docs came, I told them I wanted to change my coverage from Employee+Family to Employee+Spouse (since we had other arrangements for the child). They added the option for Employee+Spouse and that is what I selected.

So, yes, you can change your coverage when you start COBRA.