Cobra transition to ACA question

[streamjp]

Hi - I lost my job and related medical benefits in October. Married with 1 dependent, live in NJ.

Received the Cobra notification on Oct 31. There is a 60 day period to decide to elect Cobra coverage (must decide by 12/30), then another 45 days to pay the premium that would be retroactive to Nov 1.

I plan to enroll in the ACA for 2019 (Jan 1) and with loss of income should qualify for a good subsidy, much less expensive then Cobra.

Question is can I elect the Cobra option by 12/30, then not pay the premium during the 45 day grace period? Premium would be $3400 for the 2 month period Nov/ Dec.

If not, my next option would be to decline Cobra and enroll in ACA for month of December 2018 at full cost.($1500/ month)

Any other considerations? - we expect to have little to no medical service requirements between now and end of year.

Thanks in advance.

 

[candrew]

Question is can I elect the Cobra option by 12/30, then not pay the premium during the 45 day grace period?

Based upon the information you've provided - rather than electing COBRA by 12/30 - think of it as having the option of declining COBRA by 12/30.

DW & I were in the same boat 2 years ago when I retired on November 1st. We kept the COBRA option open until we enrolled for ACA coverage on January 1st.

Should you incur a medical expense between now and January 1st, you can always elect COBRA coverage retroactively to your date of employment separation. And yes, that means paying $200/month more for COBRA than the ACA policy. YMMV, however, considering the circumstances as you've explained them, it seems the best approach is to only enroll in COBRA if you incur a medical expense between now and year's end.

 

[ivinsfan]

Sure if you like committing fraud. It's fraud plain and simple..But if your only consideration is you probably won't actually need healthcare you've probably done things of this sort before...

 

[streamjp]

Wow- not trying anything illegal, just asking the question to get input and it's why I'm considering enrolling in ACA for the short period in 2018.

 

[CardsFan]

OP,
Consider that your plan is not without risk. Should you have a medical emergency late in the year, and fail to submit the paperwork for Cobra in time, you would have no insurance and be on the hook for the full amount. In fact, right now you are without any insurance.

Personally, I would sign-up and pay for the Cobra ASAP, and then cancel it when your ACA policy comes into effect.

 

[candrew]

Sure if you like committing fraud. It's fraud plain and simple..But if your only consideration is you probably won't actually need healthcare you've probably done things of this sort before...

Fraudulent?

From the U.S. Dept. of Labor website:

"The initial premium payment must be made within 45 days after the date of the COBRA election by the qualified beneficiary. Payment generally must cover the period of coverage from the date of COBRA election retroactive to the date of the loss of coverage due to the qualifying event."

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.

 

[candrew]

OP,
Consider that your plan is not without risk. Should you have a medical emergency late in the year, and fail to submit the paperwork for Cobra in time, you would have no insurance and be on the hook for the full amount. In fact, right now you are without any insurance.

Personally, I would sign-up and pay for the Cobra ASAP, and then cancel it when your ACA policy comes into effect.

There is only risk should the OP wait beyond the 60 day grace period to elect COBRA coverage and/or subsequently fail to make the premium payment within 45 days of election.

 

[MBSC]

Here is a previous post on the subject.

Electing COBRA is a 105 day process broken into two parts. First, you will have 60 days to decide if you want to return the election form to accept COBRA. Return the form on day 55. The postmark date is used when mailed and some let you submit by internet/phone.

Then, you get 45 days from the date you returned the form to decide if you want to pay the first premium and be covered retroactively to 2/1/19. Don't make the first payment by day 100 (55+45) if nothing major happens. Pay cash to a 'doc in a box' for something minor.

Circling back to the election form. Consider completing it, placing it an envelope, and leaving it with a trusted relative with instructions to mail in case you and DW are incapacitated in a car accident on day 50 and unable to mail it before day 60. Otherwise, retrieve the form on day 55 and submit it yourself.

Q14: How do I elect COBRA?

Qualified beneficiaries must be given an election period of at least 60 days during which each qualified beneficiary may choose whether to elect COBRA coverage. This period is measured from the later of the date of the qualifying event or the date the COBRA election notice is provided. COBRA coverage is retroactive if elected and paid for by the qualified beneficiary.

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.

More information: https://www.cms.gov/CCIIO/Programs-and-Initiatives/Other-Insurance-Protections/cobra_qna.htm

 

[candrew]

^^^^^^

+1

 

[ivinsfan]

Fraudulent?

From the U.S. Dept. of Labor website:

"The initial premium payment must be made within 45 days after the date of the COBRA election by the qualified beneficiary. Payment generally must cover the period of coverage from the date of COBRA election retroactive to the date of the loss of coverage due to the qualifying event."

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.

We must have different definitions of fraud...you either have HI or don't. If you plan to kind of have it and only actually pay for it if you need it..going into it planning to get free insurance is not cool. Once again there is a rule in place to help people keep coverage and give them a few days to make a decision and immediately people start wondering how they can get something for nothing.

Since the OP is going ACA anyway why not simply do it as soon as eligible?

 

[candrew]

Received the Cobra notification on Oct 31. There is a 60 day period to decide to elect Cobra coverage (must decide by 12/30).

Remember, the election period is measured from the later of the date of the qualifying event or the date the COBRA election notice is provided.

You mentioned "receiving" notification on 10/31. If the notice arrived via mail on that date it is possible that the actual notification date was a few days earlier. Although my last day of work was on November 1st a couple of years ago, the COBRA notification was dated November 3rd.

That official notification date could be critical in terms of having a gap in coverage.

 

[ivinsfan]

Wow- not trying anything illegal, just asking the question to get input and it's why I'm considering enrolling in ACA for the short period in 2018.

Go with ACA then, you asked can I elect COBRA (which means signup for the insurance and expect them to cover me) until the end of the year knowing full well I have no intention of paying for it unless I need it? I never used the word illegal I said it was fraud..

 

[candrew]

We must have different definitions of fraud...you either have HI or don't. If you plan to kind of have it and only actually pay for it if you need it..going into it planning to get free insurance is not cool. Once again there is a rule in place to help people keep coverage and give them a few days to make a decision and immediately people start wondering how they can get something for nothing.

Since the OP is going ACA anyway why not simply do it as soon as eligible?

If the OP elects the coverage within the 60 days as stipulated by the law, he must pay the premiums. If not, he's on the hook for any medical expenses. There is no intent to criminally deceive, and no free ride. It's entirely within the legal frameworks of the U.S. Dept. of Labor and CMS.

 

[ivinsfan]

If the OP elects the coverage within the 60 days as stipulated by the law, he must pay the premiums. If not, he's on the hook for any medical expenses. There is no intent to criminally deceive, and no free ride. It's entirely within the legal frameworks of the U.S. Dept. of Labor and CMS.

I'm confused are you saying it is OK for someone to elect and then not pay the premium or that it's not OK for someone to do an election at the end of the 60 days and not pay the premium because he never "used" the insurance. So you search around for insurance coverage and 45 days in notify COBRA you want insurance , 43 days after that you enroll in a different plan tell COBRA thanks a lot for the free insurance I'm not paying you.. is that OK?

 

[bingybear]

OP,
I don't think what you are talking about trying is illegal, but some may think of it as not ethical. You do have a risk of waiting as pointed out. If for some reason you can't elect and make payment in time, you will be without insurance. This is true if you are in a hospital bed at the time. I think most people who try this have no problems.
I took cobra and did roth conversions up to the top of the 15% bracket. First full year on the ACA I ended up doing the same. This year doing roth conversions to the top of the 12% does not make sense when just looking the trade of subsidy and roth conversion. I looked at longer term issues and I think I need to roth convert to the top of the 24% bracket for longer term results. The subsidy is a lot of money, but not when you look at what happens when other things happen that you should be planning for.

 

[candrew]

I'm confused are you saying it is OK for someone to elect and then not pay the premium or that it's not OK for someone to do an election at the end of the 60 days and not pay the premium because he never "used" the insurance. So you search around for insurance coverage and 45 days in notify COBRA you want insurance , 43 days after that you enroll in a different plan tell COBRA thanks a lot for the free insurance I'm not paying you.. is that OK?

This isn't about what I, or anyone else says "is okay". It is what the law stipulates. From the Dept. of Labor:

https://www.dol.gov/sites/default/f...bra-continuation-health-coverage-consumer.pdf


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.

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. The covered employee or spouse must be allowed to elect on behalf of any dependent children or on behalf of all of the qualified beneficiaries. A parent or legal guardian may elect on behalf of a minor child.

Q9: If I waive COBRA coverage during the election period, can I still get coverage at a later date?

If you waive COBRA coverage during the election period, you must be permitted later to revoke your waiver of coverage and to elect continuation coverage as long as you do so during the election period. Then, the plan need only provide continuation coverage beginning on the date you revoke the waiver.

 

[CardsFan]

There is only risk should the OP wait beyond the 60 day grace period to elect COBRA coverage and/or subsequently fail to make the premium payment within 45 days of election.

The risk may be small, but the cost could be great. If OP has a debilitating illness (stroke, say) before making the election, and cannot physically make the election, what happens? Can spouse do it on his behalf? Does the election need to be in writing and received by the end date? What if the stroke occurs on 12/30? What if there is a car accident and all 3 are injured, and no one can make the election?

I agree these have a very small chance of occurring, but the cost could be huge. Which, of course, is the primary reason to buy insurance.

 

[ivinsfan]

This isn't about what I, or anyone else says "is okay". It is what the law stipulates. From the Dept. of Labor:

https://www.dol.gov/sites/default/f...bra-continuation-health-coverage-consumer.pdf


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.

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. The covered employee or spouse must be allowed to elect on behalf of any dependent children or on behalf of all of the qualified beneficiaries. A parent or legal guardian may elect on behalf of a minor child.

Q9: If I waive COBRA coverage during the election period, can I still get coverage at a later date?

If you waive COBRA coverage during the election period, you must be permitted later to revoke your waiver of coverage and to elect continuation coverage as long as you do so during the election period. Then, the plan need only provide continuation coverage beginning on the date you revoke the waiver.

This doesn't address the issue of actually paying for it when you have elected it. If you got 60+ days of coverage and didn't pay for if are the insurance companies going to send a bill collector after you...

 

[ivinsfan]

The risk may be small, but the cost could be great. If OP has a debilitating illness (stroke, say) before making the election, and cannot physically make the election, what happens? Can spouse do it on his behalf? Does the election need to be in writing and received by the end date? What if the stroke occurs on 12/30? What if there is a car accident and all 3 are injured, and no one can make the election?

I agree these have a very small chance of occurring, but the cost could be huge. Which, of course, is the primary reason to buy insurance.

Exactly and with regular insurance you want to dot your i's and cross your t's for exactly these reasons. That's why if someone knows they want to use cobra and actually pay for it they won't wait until the 59th day or until something happens to a family member...

 

[streamjp]

Thanks for all the responses.

One clarification - received the notification letter on 10/24 stating my insurance with my employer will end on 10/31 and the Cobra election form must be postmarked by 12/30.

Right now, leaning toward enrolling in ACA starting 12/1 enrolling in same plan I intend to use in 2019.

I'm concerned about the 1-2 day gap in coverage after 12/30 (12/31).

 

[candrew]

This doesn't address the issue of actually paying for it when you have elected it. If you got 60+ days of coverage and didn't pay for if are the insurance companies going to send a bill collector after you...

Click on the Dept. of Labor https://www.dol.gov/sites/default/files/ebsa/about-ebsa/our-activities/resource-center/faqs/cobra-continuation-health-coverage-consumer.pdf provided and read through the FAQ's. It answers this and any other concerns you might have.

 

[ivinsfan]

Click on the Dept. of Labor https://www.dol.gov/sites/default/files/ebsa/about-ebsa/our-activities/resource-center/faqs/cobra-continuation-health-coverage-consumer.pdf provided and read through the FAQ's. It answers this and any other concerns you might have.

I'm not planning on doing it, just saying I don't believe that course of action is ethical.

 

[broadway]

Thanks for all the responses.

One clarification - received the notification letter on 10/24 stating my insurance with my employer will end on 10/31 and the Cobra election form must be postmarked by 12/30.

Right now, leaning toward enrolling in ACA starting 12/1 enrolling in same plan I intend to use in 2019.

I'm concerned about the 1-2 day gap in coverage after 12/30 (12/31).

I am not understanding the 1-2 day gap in coverage you are talking about.

If you want to enroll in ACA, I would suggest doing it sooner than later. So that you have the paperwork in place. Annual enrollment has already started.

Remember that for November 2018, your insurance ID card will show expired when health care providers look you up on the system, you will have to pay ahead for any services and then get reimbursement. Happened to me one time when I was laid off and transitioning to COBRA. The services was for an ultrasound, but it could have been something much more expensive.

.

 

[DAYDREAMER]

Sure if you like committing fraud. It's fraud plain and simple..But if your only consideration is you probably won't actually need healthcare you've probably done things of this sort before...

Lol, Ivinsfan to the moral rescue. You must have a really high perch to look down among the minions and judge.

 

[cathy63]

This doesn't address the issue of actually paying for it when you have elected it. If you got 60+ days of coverage and didn't pay for if are the insurance companies going to send a bill collector after you...

Yes they are. If you send in the form saying you elect to sign up for COBRA, then you are on the hook to pay the premiums for the entire 60-day election period plus however many months you stay enrolled after that, and you are subject to whatever bill collection method the insurance company uses. If you send in the form on Day 1 and cancel on Day 60, you don't have to pay the premiums for those two months until Day 105, but you do have to pay them. If you never send in the form, then none of your medical claims will be paid but you won't owe any premiums either.

However, you really can legally and non-fraudulently wait until the 60th day to decide whether to elect COBRA coverage. If you break your leg on the 31st day of your 60-day election period, you can still send in the form up until the 60th day and your broken leg will be covered. As far as I know, COBRA is the one and only kind of insurance that you can purchase retroactively.

The problem for OP is that if he takes the wait-and-see approach, there is a risk that he has some medical issue late in the 60-day period that prevents him from sending in the form, or that he needs medical care on New Year's Eve. He will have to figure out his risk tolerance for such events.