Even though I have great respect for dm200, I am going to have to be the Yin on this Yang. I feel as though their response on every COBRA thread represents a FUD campaign. There really are no practical risks to using COBRA for gap pending-coverage if you simply make the election and payments on time if it becomes necessary
The often quoted; "what if you get hit by a bus and are in a coma?" changes nothing. Besides being a little over-dramatic and extremely unlikely. If you are using COBRA for this purpose simply let someone know. A healthcare proxy, next of kin, hospital (they want to get paid), etc.. can elect and submit payments on your behalf. Unlike dm200, I have used COBRA for gap pending-coverage five times and saved thousands of dollars.
One time I even successfully went three months before new employer insurance kicked in. I did have one provider visit and a couple of prescriptions during that time. However, they were well below what the COBRA premiums would have been for those three months Your coverage will lapse, you will have to pay full price for the prescriptions up front and you will get provider bills of the full amount.
In the times I eventually elected and paid for COBRA coverage, both the premiums and the coverage was retroactive. You will get the difference between what you paid for the prescriptions and your responsibility amount after the negotiated rate is applied for provider bills as if you have been on the coverage all along.
Thankfully somebody (MikeT) actual posted some information that had been omitted and countered misinformation. You have far more that a 60 day gap. It could be up to as much as 120 days, but then I would have to agree with dm200 as taking too great a risk.
26 CFR 54.4980B-6 - Electing COBRA continuation coverage, Q&A 1:
26 CFR 54.4980B-6 - Paying for COBRA continuation coverage, Q&A 5:
- ...The election period must not end before the date that is 60 days after the later of -
- The date the qualified beneficiary would lose coverage on account of the qualifying event; or
- The date notice is provided to the qualified beneficiary of her or his right to elect COBRA continuation coverage.
- Except as provided in this paragraph (a) or in paragraph (b) or (d) of this Q&A-5, timely payment for a period of COBRA continuation coverage under a group health plan means payment that is made to the plan by the date that is 30 days after the first day of that period. Payment that is made to the plan by a later date is also considered timely payment if either -
- Notwithstanding paragraph (a) of this Q&A-5, a plan cannot require payment for any period of COBRA continuation coverage for a qualified beneficiary earlier than 45 days after the date on which the election of COBRA continuation coverage is made for that qualified beneficiary.
In all five times I have been eligible for COBRA, the Notice Packet arrived about two weeks after the employer coverage ended regardless of the actual separation date. So the maximum timeline from loss of coverage is generally:
- 15 days receive COBRA packet
- 75 days must elect COBRA. 60 days after receipt of packet. Although some companies will specify a fixed date.
- 120 days must pay for COBRA. 45 days after election.
- 30 day grace period on every monthly payment. Coverage will lapse and be retroactively reinstated. So you don't really want to do it, but if you forget a late payment < 30 days it does not terminate COBRA.
I suggest you elect COBRA 7 - 10 days before the 60 day election deadline and make payment 7 - 10 days before the payment deadline. When submitting the election and payment, I always sent them by priority mail. It is a few bucks but here again minimizes risk. My last couple of times you could elect and make the first payment online and schedule all future payments by ACH.
So I am really not that far from dm200. Bogleheads target the highest risk adjusted returns. Using COBRA to cover a coverage gap is exactly that. I just believe that any of the minimal risks can be mitigated.