Cobra and ObamaCare

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moorso
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Cobra and ObamaCare

Post by moorso »

I told my significant other I would ask this question, so here goes.

She will be 63 years old the first of November this year and is retiring on that date. She has group health insurance with her employer. Her hope is to pick up Obamacare on Jan 1, 2021 which will be 60 days from her qualifying event (end of work).

Her question is can she simply not sign up and not pay for Cobra unless she needs the insurance? Cobra gives a person 60 days (and I think even more now due to Covid) to signup and pay retroactively . So essentially she would have the Cobra paperwork filled out, but not sent in to her employer unless an event happened where she would need the insurance. Obviously it would be someone else, like me, who would need to send in the paperwork if she needed the insurance.

Does this sound like a safe and feasible approach which could save her $1,200 or so (2 months of cobra premiums) ?
JBTX
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Re: Cobra and ObamaCare

Post by JBTX »

moorso wrote: Sat Aug 29, 2020 11:38 am I told my significant other I would ask this question, so here goes.

She will be 63 years old the first of November this year and is retiring on that date. She has group health insurance with her employer. Her hope is to pick up Obamacare on Jan 1, 2021 which will be 60 days from her qualifying event (end of work).

Her question is can she simply not sign up and not pay for Cobra unless she needs the insurance? Cobra gives a person 60 days (and I think even more now due to Covid) to signup and pay retroactively . So essentially she would have the Cobra paperwork filled out, but not sent in to her employer unless an event happened where she would need the insurance. Obviously it would be someone else, like me, who would need to send in the paperwork if she needed the insurance.

Does this sound like a safe and feasible approach which could save her $1,200 or so (2 months of cobra premiums) ?
You would obviously have to pay any medical out of pocket in that gap period.

There are other threads in here on the subject. I think the answer is if you did that, you probably will end up fine, but do you want to take that seemingly small risk? I just activated COBRA and in my case the benefits did NOT work until COBRA was activated, at which point you could retroactively file the claim. If an emergency happens, you would need to get care first, then activate later. If your SO was incapacitated then I guess you would have to use snail mail. And then pay it. You are banking that all health care providers are willing to give all optimal treatments based upon the assumption that her COBRA application eventually gets processed. Is that a bet you want to take.

If one were in their 20s living paycheck to paycheck maybe you take that seemingly small risk. For a 63 year old with resources I would not.
Topic Author
moorso
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Re: Cobra and ObamaCare

Post by moorso »

JBTX wrote: Sat Aug 29, 2020 11:52 am
moorso wrote: Sat Aug 29, 2020 11:38 am I told my significant other I would ask this question, so here goes.

She will be 63 years old the first of November this year and is retiring on that date. She has group health insurance with her employer. Her hope is to pick up Obamacare on Jan 1, 2021 which will be 60 days from her qualifying event (end of work).

Her question is can she simply not sign up and not pay for Cobra unless she needs the insurance? Cobra gives a person 60 days (and I think even more now due to Covid) to signup and pay retroactively . So essentially she would have the Cobra paperwork filled out, but not sent in to her employer unless an event happened where she would need the insurance. Obviously it would be someone else, like me, who would need to send in the paperwork if she needed the insurance.

Does this sound like a safe and feasible approach which could save her $1,200 or so (2 months of cobra premiums) ?
You would obviously have to pay any medical out of pocket in that gap period.

There are other threads in here on the subject. I think the answer is if you did that, you probably will end up fine, but do you want to take that seemingly small risk? I just activated COBRA and in my case the benefits did NOT work until COBRA was activated, at which point you could retroactively file the claim. If an emergency happens, you would need to get care first, then activate later. If your SO was incapacitated then I guess you would have to use snail mail. And then pay it. You are banking that all health care providers are willing to give all optimal treatments based upon the assumption that her COBRA application eventually gets processed. Is that a bet you want to take.

If one were in their 20s living paycheck to paycheck maybe you take that seemingly small risk. For a 63 year old with resources I would not.
Thanks for the well thought out response. This pretty much confirms what our fears might be with this strategy and I think you are absolutely correct....no need to take that small risk.
JBTX
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Re: Cobra and ObamaCare

Post by JBTX »

moorso wrote: Sat Aug 29, 2020 11:57 am
JBTX wrote: Sat Aug 29, 2020 11:52 am
moorso wrote: Sat Aug 29, 2020 11:38 am I told my significant other I would ask this question, so here goes.

She will be 63 years old the first of November this year and is retiring on that date. She has group health insurance with her employer. Her hope is to pick up Obamacare on Jan 1, 2021 which will be 60 days from her qualifying event (end of work).

Her question is can she simply not sign up and not pay for Cobra unless she needs the insurance? Cobra gives a person 60 days (and I think even more now due to Covid) to signup and pay retroactively . So essentially she would have the Cobra paperwork filled out, but not sent in to her employer unless an event happened where she would need the insurance. Obviously it would be someone else, like me, who would need to send in the paperwork if she needed the insurance.

Does this sound like a safe and feasible approach which could save her $1,200 or so (2 months of cobra premiums) ?
You would obviously have to pay any medical out of pocket in that gap period.

There are other threads in here on the subject. I think the answer is if you did that, you probably will end up fine, but do you want to take that seemingly small risk? I just activated COBRA and in my case the benefits did NOT work until COBRA was activated, at which point you could retroactively file the claim. If an emergency happens, you would need to get care first, then activate later. If your SO was incapacitated then I guess you would have to use snail mail. And then pay it. You are banking that all health care providers are willing to give all optimal treatments based upon the assumption that her COBRA application eventually gets processed. Is that a bet you want to take.

If one were in their 20s living paycheck to paycheck maybe you take that seemingly small risk. For a 63 year old with resources I would not.
Thanks for the well thought out response. This pretty much confirms what our fears might be with this strategy and I think you are absolutely correct....no need to take that small risk.
I literally just activated COBRA a few days ago. I put it off a week or two out of laziness. Then I had several appointments last week. It was a bit of a hassle dealing with the providers. Some were willing to wait to file the claim. Others wanted payment in advance. At least with me I could call and expedite the activation. If I were hit by a bus presumably no one is specifically authorized to do that for me, so then you'd have to wait for snail mail. It would all probably work out OK, but not a hassle or stress that I'd want to deal with in a life and death situation.
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MP123
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Re: Cobra and ObamaCare

Post by MP123 »

I think she has a 60 day period after and before the QLE to get on an ACA plan.

Is it possible for her to coordinate ACA coverage to start on Nov 1? Or is the goal just to save the two months of premiums if possible?

I agree with the above reasoning about deferring COBRA coverage pending an issue, that would make me nervous in this case.
Topic Author
moorso
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Re: Cobra and ObamaCare

Post by moorso »

MP123 wrote: Sat Aug 29, 2020 12:08 pm I think she has a 60 day period after and before the QLE to get on an ACA plan.

Is it possible for her to coordinate ACA coverage to start on Nov 1? Or is the goal just to save the two months of premiums if possible?

I agree with the above reasoning about deferring COBRA coverage pending an issue, that would make me nervous in this case.
Yes, she should be able to get Obamacare to take effect the day she retires...she was just trying to save a couple months of premiums.
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Watty
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Re: Cobra and ObamaCare

Post by Watty »

moorso wrote: Sat Aug 29, 2020 11:38 am She will be 63 years old the first of November this year and is retiring on that date.
At many(but not all) companies your health insurance will be paid until the end of the month when she retires. November 1st is a Sunday so she should make sure that her official last day is Monday November 2nd if that would get her health insurance through the end of November since that might get her health insurance for an additional month. Likewise if she works a bit longer and her last day is December 1st then that would get her health insurance through then end of the year, if her company health insurance works that way.

I don't recall the details of how it works but if she is going to try to get a subsidy for an ACA policy then she needs to dig through the details about how that works with COBRA. There could be a "gotcha" that would make her ineligible for the subsidy depending on what she does with COBRA.

After I retired I was on COBRA with a Blue Cross plan so when I switched to an ACA plan there was also a Blue Cross plan which looked like an obvious choice. The problem was that the network for the ACA Bluecross plan was not nearly as good and none of my doctors in the new network. She really needs to look at the details of the ACA plan networks since they are often pretty limited.

There is still a lot of uncertainty about what will happen with the ACA. In most most states you can use COBRA for 18 months but a few states will allow you to use it for 36 month. Instead of retiring at 63 I would also take a hard look at working until she is 63.5 so that she could use COBRA all the way until she is 65 and can get on Medicare.

It really depends on all her details but I would be real tempted to work another six months just so I could use COBRA until I could go directly on Medicare. If she has good work health insurance that is likely a lot better than an ACA plan especially if she will not be getting a large subsidy. That would include Thanksgiving, Christmas, and New Years so there would be a lot of holidays during that extra time and if the stars align just right she might really only have to work five more months and a day to get the dates to line up.
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MP123
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Re: Cobra and ObamaCare

Post by MP123 »

Where I live $600/mo for the COBRA plan is cheaper than an ACA plan for a 63 year old like OP's wife.

It might be better to stay on COBRA as long as possible and then switch to an ACA plan.
Topic Author
moorso
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Re: Cobra and ObamaCare

Post by moorso »

IF she can stay under the $51,000 cliff for Obamacare then I believe the max cost of the plan after subsitidies would be 9.78% of her income. So assuming she can keep that at $50,000 or less lets say, then her max cost would be about $410 per month if I am doing the math right. She has a relatively low paying job, but she does get some pension and would be receiving social security for one month....very important for her to keep that modified adjusted gross income below the cliff. I am not sure about the cost of COBRA but I think its at least $600 per month.
Last edited by moorso on Sat Aug 29, 2020 4:35 pm, edited 1 time in total.
Dottie57
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Re: Cobra and ObamaCare

Post by Dottie57 »

MP123 wrote: Sat Aug 29, 2020 1:38 pm Where I live $600/mo for the COBRA plan is cheaper than an ACA plan for a 63 year old like OP's wife.

It might be better to stay on COBRA as long as possible and then switch to an ACA plan.
+1
neilpilot
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Re: Cobra and ObamaCare

Post by neilpilot »

moorso wrote: Sat Aug 29, 2020 11:38 am I told my significant other I would ask this question, so here goes.

She will be 63 years old the first of November this year and is retiring on that date. She has group health insurance with her employer. Her hope is to pick up Obamacare on Jan 1, 2021 which will be 60 days from her qualifying event (end of work).

Others have answered your question - when our DD was between jobs, on my advice she also delayed Cobra payment and was able to then start coverage thru her new employer 6 weeks later without paying for Cobra (or even needing coverage). It was available if she did develop a medical issue.

I'd advise that your friend reconsider retiring on Nov 1st and waiting until Jan 1st to start ACA. Not only is that cutting it too close, but it's 61 days since her qualifying event.
Lalamimi
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Re: Cobra and ObamaCare

Post by Lalamimi »

If she can't afford 2 months of coverage upon retiring why retire now? Take one or the other effective Nov 1, or talk to HR again and see if they can cut her a deal to pay for it as part of a "retirement' package.
Old Sage(brush)
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Re: Cobra and ObamaCare

Post by Old Sage(brush) »

I don't see why the OP's (or the person retiring) strategy does not work. COBRA allows 60 days from when you receive the notification to opt for it, and to me for a healthy person the risk is so small, why not save the money. In fact I believe you typically don't even receive the COBRA paperwork until weeks after your final day of employment, so effectively you are already doing this, but just doing it for a bit longer to save the money. Having paid for health insurance my entire working life, and rarely using it, I would take the risk. The risk in my mind, btw, is not that there will not be coverage during the 60 day period, just that in the highly unlikely event that it is needed it will be more of a hassle to get reimbursed for health issues that have been paid. But, they should get reimbursed, and I for one am so sick of the way health insurance works in this country I'd go ahead and go for it.
quantAndHold
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Re: Cobra and ObamaCare

Post by quantAndHold »

If she were 25, I’d say take the risk. Since she’s 63, though...when my dad had a heart attack, he ran up over $100k in bills in six days. If he had needed to do something with his insurance during that six days (or for several weeks after), it wouldn’t have happened.

The other thing is make absolutely sure that her income is going to be low enough for the ACA subsidy. If it’s not, then CObRA is probably a better deal.
Yes, I’m really that pedantic.
random_walker_77
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Re: Cobra and ObamaCare

Post by random_walker_77 »

Old Sage(brush) wrote: Sat Aug 29, 2020 5:36 pm I don't see why the OP's (or the person retiring) strategy does not work. COBRA allows 60 days from when you receive the notification to opt for it, and to me for a healthy person the risk is so small, why not save the money. In fact I believe you typically don't even receive the COBRA paperwork until weeks after your final day of employment, so effectively you are already doing this, but just doing it for a bit longer to save the money. Having paid for health insurance my entire working life, and rarely using it, I would take the risk. The risk in my mind, btw, is not that there will not be coverage during the 60 day period, just that in the highly unlikely event that it is needed it will be more of a hassle to get reimbursed for health issues that have been paid. But, they should get reimbursed, and I for one am so sick of the way health insurance works in this country I'd go ahead and go for it.
This. If the concern is that providers are going to be hesitant to treat or will haggle over payments until COBRA is activated, this will be true irregardless of whether she delay starting. Even if you want to activate COBRA immediately, it'll probably take 4-6 weeks. You won't even receive the COBRA signup forms for a couple of weeks, and it takes time to process the initial payment and inform the insurance company. So as far as your insurance company is concerned, they won't know about it for 6-8 weeks and then they'll retroactively update their records.

So waiting a little, to activate COBRA only if you needed to during those 2 months is ok. The risk is if you need to activate it and there's no one around to mail in the paperwork before the postmark deadline. Have a backup person designated to mail in the paperwork in case both of you are in the hospital from the same incident.

It's a minor savings of "only a couple months" health insurance payments. :twisted:

It's relatively low risk, and for this much money, maybe worth doing. If you're the kind of person to clip coupons, this is a much more impactful sum of money than any amount of coupon hunting
Spirit Rider
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Re: Cobra and ObamaCare

Post by Spirit Rider »

To clarify, you have 60 days to elect COBRA coverage from the latter of the end of your employer's coverage or when your actually receive the COBRA notice election packet (usually about two weeks after separation). Then you have 45 days to pay for and activate the COBRA coverage. So technically, you could wait 105 days.

That would be very risky. However, I have done this successfully more than once, planning on one week early for both deadlines. Only paying for and activating COBRA if necessary. Yes, you are liable for any bills while without coverage until retroactive coverage resumes. I never have had to pay any provider bill during this time, only prescriptions. Providers are notorious for being very late with billing and you can easily push payment out until Cobra coverage is activated or you choose to not activate COBRA and pay out of pocket.

I would seriously investigate the costs of ACA premiums with subsidies if possible and COBRA coverage. If the COBRA coverage is less considering likely more comprehensive coverage. She may want to push the retirement date forward until she is 63 1/2. Then she would be be able to use COBRA until eligible for Medicare.
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moorso
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Re: Cobra and ObamaCare

Post by moorso »

Thanks all for the great input. i'm hearing pros and cons for both sides of this situation. Beginning now to lean towards having the Cobra option for November and December of this year then starting ACA in January, mainly due to what I believe will be a significant difference in cost. I will have her get a quote for Cobra, but I think its going to be steep.

She works in a lab or drawing blood each day with a mask on all day and is absolutely tired of working under these conditions. On top of that she commutes a good distance to work and up here in the Northeast making that commute early in the morning in miserable snowy conditions takes an awful toll on her.....so waiting to retire is not an option. Besides we both would like to begin snowbirding to Florida this winter. :D
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LilyFleur
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Re: Cobra and ObamaCare

Post by LilyFleur »

It would be good to make sure her coverage is good in Florida as well as whatever state you live in in the Northeast. My Blue Shield PPO (the same as the ACA but without subsidies) has a $40,000 out-of-pocket limit for out-of-network providers, which was much, much worse than my COBRA. Do both of those states have laws that prevent surprise medical billing? Those surprise medical bills are now illegal in my home state, but not in all states.
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MP123
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Re: Cobra and ObamaCare

Post by MP123 »

LilyFleur wrote: Sun Aug 30, 2020 7:25 pm It would be good to make sure her coverage is good in Florida as well as whatever state you live in in the Northeast. My Blue Shield PPO (the same as the ACA but without subsidies) has a $40,000 out-of-pocket limit for out-of-network providers, which was much, much worse than my COBRA. Do both of those states have laws that prevent surprise medical billing? Those surprise medical bills are now illegal in my home state, but not in all states.
This is a very good point.

Many of the ACA plans have narrow and small networks. She may not have much coverage outside of your area. In theory she'd be covered for emergencies but might be subject to balance billing.

She might be better off with the COBRA plan even if it was more expensive, if it was a true nationwide PPO and you planned to spend significant time in another state.

Be sure you're comparing apples to apples when looking at the plans.
Old Sage(brush)
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Re: Cobra and ObamaCare

Post by Old Sage(brush) »

One other point worth mentioning here is that I believe the deadlines for Cobra notifications, and importantly beneficiary elections, have been extended to a date 60 days after the end of the National Health Care Emergency for Covid. The end date is currently a date in October, if not extended by the federal government (the previous end date has already been extended once). What this means for anyone leaving a job that becomes entitled to exercise Cobra benefits is they may have a much longer look back period for retroactively enacting Cobra coverage. So the savings of only a couple of months could be much longer, and larger savings. If they will eventually plan to buy health insurance on the exchange practically speaking if they are a infrequent user of health insurance and basically healthy (a person that needs health insurance for catastrophic coverage, but no ongoing health issues) they may be able to have a fairly significant gap period where they don't pay at all for health insurance until the end of the National Emergency, and then pick up insurance from a state exchange. This strategy would be done with the idea that they could activate Cobra if needed retroactively for the gap period.
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