Medicare, COBRA and ACA... Oh my!

[creekstone]

I could use some help understanding our health coverage options.

I am retired and will turn 65 in August. My wife intends to retire at the end of the year at age 59. Currently we have health coverage from her employer.

Medicare: My current thinking is to get on Medicare as soon as I'm eligible. I assume my wife's employer will simply switch her to a single plan. Part of my logic for getting on Medicare as soon as possible is COBRA...

COBRA: My understanding is that COBRA is a continuation of existing coverage, no exceptions. If so, I would think it is better that I'm not on her company plan when she retires. My wife doesn't want to ask for clarification from her HR department because she doesn't want them knowing her retirement plans. Does anyone know if indeed COBRA is a firm continuation of existing coverage?

ACA: This might be a better option for my wife than COBRA. I'm still in the learning process. But we won't have any significant income, just minimal interest and dividends. Are Roth conversions considered income?

 

[Dash man]

When we retired we went onto DW’s Cobra which was exactly the same coverage she had while employed, except we paid the full cost. It was better coverage and less expensive than any ACA plans available to us. We would not get any subsidies. When her Cobra ended after 18 months, we went on a retiree health plan from my former employer. It was better coverage for comparable costs than ACA. We stayed on that coverage until Medicare which we both went on in the same month.
Roth conversions are considered income for ACA.

 

[COcheesehead]

COBRA has a time limit, I believe 18 months, but I would verify that.
I went on COBRA for the first year and regretted it. I ended up paying almost double over an ACA plan and didn’t really get much more.
This year I saved even more by going from a gold to a bronze and adding an HSA account. We now pay about a third of what we did for COBRA.

 

[Jimmie]

Sorta in the same situation. We're on my employer's health plan (I retired 4 years ago). I turn 65 in Sept and employer will cut me off at that point to force me to medicare. DW can either continue with my employer plan by paying COBRA ($900/month) or sign up for WA marketplace health plan. Based on our income, its LOTS cheaper for her to do WA ACA health plan.

Can't say which is best for your DW as ACA cost is based on your family income. And yes, Roth conversions are considered as income. Income is pretty much your 2022 1040 Line 9 (excluding things like cash assistance from other gov agencies, supplemental security income (SSI), child support payments, some veteran's benefits, etc). However, ACA wants your current income estimate, not what you declared in last year's tax return. You'll just have to compare her employer's COBRA costs vs your state's ACA costs. Keep in mind, COBRA coverage can only last for 18 months.

If her employer doesn't kick you off her health plan when you turn 65, you should still sign up for Medicare Part A during your OEP.

 

[punkinhead]

It sounds like staying on your wife's insurance until you turn 65 is probably your cheapest and easiest option. In August you'll start medicare. Since you'll be on Medicare when she retires the question seems to be what should she do. I retired a year before my wife and was on her employer insurance then we used cobra for the first year after she retired. It was crazy expensive and would not have been my choice but she was a bit overwhelmed and didn't want to deal with finding an ACA plan that allowed her to keep her doctors. After the first year we went on ACA which is about 1/3 the cost of cobra with similar coverage.

 

[Aerides]

This is the order of events:

You are on DW now.
You turn 65 in August, go on Medicare, DW takes you off her plan - now she's solo - I don't think she can NOT tell HR this part, you are 65 and you come off her plan.
DW retires before 12/31/23, and takes Cobra (best to do for at least thru EOY)

At open enrollment in November, DW decides on whether she wants to Cobra for full year 2024, or go on the ACA, after shopping plans. Even if she hasn't decided on her end date at her employer, she goes thru the motions of re-upping her enrollment for 2024, during employee plan selection anyway. She can always go back and shop the ACA once she leaves her employer, no matter the date, as retirement is a qualifying change to get on the ACA outside of normal enrollments.

 

[Telly]

Setup Medicare so you go on it at 65.

Whatever you do, DO NOT go or be on COBRA yourself if 65 or older. COBRA is NOT a eligible insurance for someone 65 or older as per Medicare. Anyone who is on COBRA, and 65 or 65+, and out of their initial Medicare open enrollment period, will have a rude awakening when they apply for Medicare later on. A Medicare fine for life.

A person 65 or older, and being on a suitable employer health plan, will not have a penalty when they apply for Medicare at whatever age they eventually do. They will get a special enrollment period for that.
EDIT: about 6 months before turning 65, you should get a letter from the employer who is providing the insurance, telling you whether the insurance is acceptable for delaying Medicare. I think the magic words are "Qualifying Insurance".

 

[Telly]

Just a note, the cost of COBRA is the true cost of employer-supplied insurance, plus up to a 2% administrative fee. Many employers heavily subsidize the true cost of insurance for their employees. You probably know that already, but I am surprised by many working people that are clueless about the real cost of health insurance.

 

[jim584672]

COBRA is going to be VERY expensive. Check the ACA estimator to get a ball park number: https://www.kff.org/interactive/subsidy-calculator/

 

[Aerides]

COBRA is going to be VERY expensive. Check the ACA estimator to get a ball park number: https://www.kff.org/interactive/subsidy-calculator/

True, but for finishing up a year (say a couple months) especially if you're already past your deductible, it can be helpful and the costs can even out, or be worth it, to avoid changing docs at a bad time. It's different for everyone, and research needs to be done by every person considering their options.

 

[O2Bfree]

Find the ACA health plan shopping tool for your state and enter your expected taxable income (MAGI), which will include Roth conversions. You might be shocked at how little you'll pay for an ACA plan. We had budgeted around $700 each for monthly HI premiums, but with our low taxable income—interest and dividends like you—it came out to less than 1/4 of that. MUCH lower during the Covid crisis, like $9/month each!

 

[orchid55]

The robustness of ACA coverage is highly dependent on your home state. In my state ACA plans are only narrow network HMO plans. If your wife has ongoing medical needs or you plan to travel outside of your area in retirement COBRA may provide better coverage. It won't be cheap, but it will probably cover you in the whole country.

Your state may offer wonderful ACA plans but it pays to check.

 

[badatmath]

Wife must surely have access to health plan information she could look up without talking to HR. I had links to our employee benefits information that answered things like "what happens when I turn 65". Just saying she could probably find those and take a peek without anyone being in the loop. Agree COBRA will be very $$.

 

[mcbraemer]

I retired at 63.5 and went directly onto Cobra from my employer insurance. This was mid-2018, but even so, the Cobra cost I considered "reasonable" at approximately $550 per month ( just for me) for good medical, dental and vision plans. Applied for Medicare at the end of my legally permitted 18 months of Cobra, and began Medicare exactly at age 65. This was my plan to get out of the w*rkplace a year and a half early, and it worked fine for me. DW had already retired a year earlier and was already on Medicare before I retired early (63.5).

 

[MC Rider]

We used an insurance agent to help sort it out. Will be talking to them again in a few months. There is no extra cost to you, so why not? Help avoid making a bad choice. It is complicated.


Cobra is the worst.

 

[MBSC]

COBRA: My understanding is that COBRA is a continuation of existing coverage, no exceptions. If so, I would think it is better that I'm not on her company plan when she retires.

She can elect individual COBRA even if she has a family group plan at retirement. It's the benefits, like provider network, that remain unchanged.

Q8: How long do I have to elect COBRA coverage?

...Each of the qualified beneficiaries for a qualifying event may independently elect COBRA coverage. This means that if both you and your spouse are entitled to elect continuation coverage, you each may decide separately whether to do so.

Reference: https://www.dol.gov/sites/dolgov/fi...bra-continuation-health-coverage-consumer.pdf

****

You are on DW now.
You turn 65 in August, go on Medicare, DW takes you off her plan - now she's solo - I don't think she can NOT tell HR this part, you are 65 and you come off her plan.

You may be thinking of retiree plans. Medicare has additional options when coverage is through current employment.

Deciding Whether to Enroll in Medicare Part A and Part B When You Turn 65

[page 4] I have health insurance based on my (or my spouse’s) current employment, from an employer with 20 or more employees.

Your decision to enroll in Part A and Part B depends on whether you have a high-deductible health plan with a health savings account (HSA):

[Scenario #1] I do NOT have a Health Savings Account (HSA).

Part A: If you qualify for premium-free Part A, you should enroll in Part A when you turn 65....You will NOT pay a penalty for delaying Part A, as long as you enroll within 8 months of losing your coverage or stopping work (whichever happens first).

Part B: You can delay Part B until you (or your spouse) stop working or lose that employer coverage. This allows you to save the cost of your Part B premium. It also allows you to postpone your one-time “Medigap open enrollment period” until a later time, when you may want to purchase this type of coverage.

You will NOT pay a penalty for delaying Medicare, as long as you enroll within 8 months of losing your coverage or stopping work (whichever happens first)...

You should talk with your employer benefits manager about whether it makes sense to delay Part A and Part B.

[Scenario #2] I have a High-Deductible Health Plan AND a Health Savings Account (HSA). [See PDF document in link]

Source: https://www.cms.gov/Outreach-and-Ed...ers-and-Unions/FS3-Enroll-in-Part-A-and-B.pdf

 

[Yipper]

Reviving this thread...

Isn't it true that you can select COBRA retroactively?

Meaning, if my last day of employment is in September (and I plan on going ACA in 2024), I can roll the dice and drag my feet selecting COBRA coverage and see if I have any medical claims for the remainder of the calendar year.

If I *DO* and they'd save me considerable money, I could select COBRA at that point, owe the premiums from back to the end of my employer's coverage and go from there.

That's my understanding anyway.

 

[Geld ist Freiheit]

Reviving this thread...



Isn't it true that you can select COBRA retroactively?



Meaning, if my last day of employment is in September (and I plan on going ACA in 2024), I can roll the dice and drag my feet selecting COBRA coverage and see if I have any medical claims for the remainder of the calendar year.



If I *DO* and they'd save me considerable money, I could select COBRA at that point, owe the premiums from back to the end of my employer's coverage and go from there.



That's my understanding anyway.

As I understand it, you have 60 days to elect for coverage. If something happens, you can sign up and be covered retroactively. If something happens on day 61+, it’s on your dime.

 

[CardsFan]

As I understand it, you have 60 days to elect for coverage. If something happens, you can sign up and be covered retroactively. If something happens on day 61+, it’s on your dime.

Or if it happens on Day 1 and you are in a coma for 60 days.

Do you feel lucky kid?

Not me. Going naked on insurance when you have the abiltiy to pay is just plain foolish. (IMHO)

 

[Geld ist Freiheit]

Or if it happens on Day 1 and you are in a coma for 60 days.



Do you feel lucky kid?



Not me. Going naked on insurance when you have the abiltiy to pay is just plain foolish. (IMHO)

That would really stink.
The smart play would be to maintain coverage.

 

[MBSC]

Isn't it true that you can select COBRA retroactively?

Meaning, if my last day of employment is in September (and I plan on going ACA in 2024), I can roll the dice and drag my feet selecting COBRA coverage and see if I have any medical claims for the remainder of the calendar year.

If I *DO* and they'd save me considerable money, I could select COBRA at that point, owe the premiums from back to the end of my employer's coverage and go from there.

It's a two-part process. You have 60 days to elect COBRA and then 45 days from election day to decide if you want to pay it retroactively. You would have to complete the first step of electing COBRA in your example due to the length of time before the ACA Annual Enrollment Period. Your spouse or adult child can click the button on the website if you are incapacitated. They can pay the premium until you reimburse them. The coma scenario is a factor if you live alone.

If you have to use the ACA Special Enrollment Period (SEP) mid-year, the ACA SEP window is only 60 days.

Q8: How long do I have to elect COBRA coverage?
If you are entitled to elect COBRA coverage, you must be given an election period of at least 60 days (starting on the later of the date you are furnished the election notice or the date you would lose coverage) to choose whether or not to elect continuation coverage.

Q15: Who pays for COBRA coverage?
When you elect continuation coverage, you cannot be required to send any payment with your election form. You can be required, however, to make an initial premium payment within 45 days after the date of your COBRA election (that is the date you mail in your election form, if you use first-class mail). Failure to make any payment within that period of time could cause you to lose all COBRA rights.

Reference: https://www.dol.gov/sites/dolgov/fi...bra-continuation-health-coverage-consumer.pdf

 

[Aerides]

The coma scenario is a factor if you live alone.

And really anything that pops up during the 90 days. You need a new doctor or referral - or even an existing one - "has your insurance changed?" is the first thing they ask to book an appointment. And urgent care center is going to want insurance or you'll pay cash and then have the hassle of reimbursement. ER admission also...hassle.