Need some clarification on ACA vs Cobra please

[bingybear]

Essentially you are saying since Cobra is retroactive you can wait to accept it and wait to get a ACA policy, then choose which one based on how your heath was during the waiting period. It is like buying car insurance after you have an accident but getting covered for the accident.

not what I was trying to say.. but I could see how my example could be seen that way. There are others that were using that more directly. cobra does have 60 days to decide if you want to buy it... and is retroactive to the day you lost your insurance.

My attempt was to show what I think is correct, but can't find a definitive example or documentation describing the situation. That is if you can take cobra and still buy an ACA plan when in a special enrollment period.

It is clear that voluntarily cancelling cobra does not create a special enrollment period. It is also clear that you can cancel cobra and purchase ACA insurance during open enrollment.
To me it would make sense that you could still buy ACA insurance during a special enrollment period, but use cobra to bridge between one insurance ending and the other starting provided you complete the ACA purchase in accordance with the special enrollment guidelines.

 

[Fermion]

Thanks everyone. I think I understand things now. This has been a good discussion and hopefully other early retirees will benefit from it.

 

[jim584672]

Just wanted to add, you have 60 days to elect COBRA, and 45 days after your election to make the payment.

 

[Winemaker]

Just wanted to add, you have 60 days to elect COBRA, and 45 days after your election to make the payment.

Which period does your payment cover? If my last day of work is SEPT 30, notify my enrollment to Cobra on NOV 29th, am I paying for DEC or am I paying in arrears?

However, in NOV it is the open enrollment period, so DW and I will be signing up for coverage to start in JAN. Then where do we stand?

 

[ziggy29]

Which period does your payment cover? If my last day of work is SEPT 30, notify my enrollment to Cobra on NOV 29th, am I paying for DEC or am I paying in arrears?

However, in NOV it is the open enrollment period, so DW and I will be signing up for coverage to start in JAN. Then where do we stand?

If you elect COBRA on November 29th, you must pay retroactive to October 1 to be covered for it. You have until around January 13-14 (45 days after November 29) to pay that. If you don't pay it, it lapses and you can't go back and elect to take it. Also anything your COBRA coverage paid for in that time -- between the day you elected to take it and the 45th day when payment wasn't made -- may have to be repaid. And being uninsured for 105 days or close to it will trigger some penalty. If you are sure other coverage will kick in on January 1, you can probably do this safely, and I'd suggest not waiting until November 29 to elect coverage, but something closer to November 20 just in case there are glitches in getting you in.

That said, testing the limits of this feels like playing with fire to me.

 

[EastWest Gal]

I signed up for ACA insurance during open enrollment, but during the enrollment the website it asked if I was losing coverage and when I answered yes, it stated that special enrollment applied. If you are eligible for special enrollment it only matters that you do it on or before the 15th of the month before you need coverage.

You won't be subjected to a penalty for not having insurance for less than two months. COBRA is retroactive if you sign up for it and you have 60 days. If your last day of work is 3/16 you will likely be covered until the end of the month.

Apply for ACA insurance before March 16 and state your coverage ends 3/31. You have until the end of the month to pay your first premium, which can be done online.


Sent from my iPhone using Early Retirement Forum

 

[Winemaker]

Thanks for your quick reply.

I am extremely conservative; I used the max. dates for information only to help with future planning. I don't like playing with fire; I am a retired coal miner.

 

[MBSC]

In theory this is a no-risk free lunch, but it could also be playing with fire, especially if you get beyond 45 days or so and there are problems getting your COBRA successfully elected retroactively. I'd have no qualms about doing this for up to 30 days or so, but beyond about 45 days I'd really start to get nervous.

+1 That is why I used the retroactive feature of COBRA only for April and not May.

Effective April 1, I had a 60 day window to decide if I wanted COBRA or not. If I chose to take COBRA, the coverage and premiums would be retroactive to April 1st.

I signed up for an ACA plan on the Marketplace with a May 1st effective date. Since the wording of the COBRA notice seemed to indicate that it had to be "received" within 60 days, I didn't want to take that chance during May.

 

[sengsational]

My personal experience was to not accept and not reject Cobra. That way, when you go through the PPACA application, you can answer "NO" to the "are you covered question" (you can answer "yes" to the "could you be covered question" and it doesn't impact your application).

I applied right after I walked out (January 24th) with a plan to activate Cobra (by paying for it) should anything "bad" happen while waiting for March 1st. Of course, as luck would have it, we did have a few unexpected minor doctor visits in February that I just paid out of pocket for. But they were nothing that would have had me engage the "Plan B" plan of paying for Cobra.

 

[Gatordoc50]

There are provisions in the law that help prevent someone from going uninsured when employment is terminated. Cobra will protect you until you can sign up for the ACA. My advice would be to be thankful for that, give notice on the 15th and let the chips fall where they may. If your employer asks you to stay on, it looks like your pay would cover any loss of ACA subsidy for the year. You could also donate your "excess" earnings to preserve the subsidy. If your employer cans you on the 15th, you have Cobra to protect you. Your only problem is that you might go unsubsidized by the taxpayers for a month or two. That is not such a bad predicament. Congratulations on FIRE.

 

[bingybear]

. If your employer asks you to stay on, it looks like your pay would cover any loss of ACA subsidy for the year. You could also donate your "excess" earnings to preserve the subsidy.

I'm at a loss on "donating" to preserve the subsidy. If you donate (thus a deduction on itemized tax deductions) would not effect the MAGI... and thus subsidy.

Is there something I don't know? I would be interested as I'll be boarder line on the subsidy due to work and vacation pay between DW and me terminating this year. Contributing to an HSA or IRA can reduce the MAGI

 

[Gatordoc50]

I'm at a loss on "donating" to preserve the subsidy. If you donate (thus a deduction on itemized tax deductions) would not effect the MAGI... and thus subsidy. Is there something I don't know? I would be interested as I'll be boarder line on the subsidy due to work and vacation pay between DW and me terminating this year. Contributing to an HSA or IRA can reduce the MAGI

I am not covered on the ACA so I am not one to ask about maximizing subsidies. If donations aren't included in the calculation the OP could volunteer the last few weeks. Anyway, the premise of my post is that the OP should just give notice when he wants and let the chips fall. Worst case scenario is you lose a thousand dollars but go out as a stand up guy/Gal which was one of the OPs major concerns. If going out as a stand up guy is not a concern then the whole problem goes away. He/she just quits on the 15th.