COBRA alternative for 1 month? (it's $2,400 per month!)

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Teague
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Re: COBRA alternative for 1 month? (it's $2,400 per month!)

Post by Teague » Sat Jan 13, 2018 8:30 pm

overthought wrote:
Sat Jan 13, 2018 6:17 pm
dm200 wrote:
Sat Jan 13, 2018 3:54 pm
Since many employer plans seem to cover the employee/family until the end of the month of termination, maybe you should try to leave one employer well before the end of the month to have continued coverage.
This. Old employer coverage is effective through end of the month employee leaves. New employer coverage often kicks in the first day of the month after employee's start date. So while it seems "clean" to end on the last working day of a month, it's actually better to end on the first working day of a month. I just changed jobs and specifically chose my resignation date as 2 Jan rather than 29 Dec to ensure coverage through the January gap. To their credit, this idea came from old company's HR dept. Though in my case it turned out to be unnecessary because new employer coverage turned out to be effective on the date of hire...
Not always, at least in my case. My last day was November 28, 2017. My company sponsored insurance ran through December 31.

I'm also currently in COBRA limbo, awaiting final paperwork completion for my pension and retroactive insurance enrollment starting January 1. I have a stamped envelope that I informed a family member of a few weeks ago containing the ready-to-go paperwork. The family member also received my instructions to fax the paperwork to the COBRA administrator, as well as to contact a specific HR person at my former employer to let them know that (falling space debris hit me; Elizabeth, it's the big one; etc.) and I am now in the hospital. The family member will then seal the envelope with contents and mail it. The contents of the envelope have already been photocopied and the family member knows where that is.
Semper Augustus

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samsoes
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Re: COBRA alternative for 1 month? (it's $2,400 per month!)

Post by samsoes » Sat Jan 13, 2018 8:32 pm

samsmith wrote:
Sat Jan 13, 2018 5:24 pm
slightly off topic - but is cobra (or other insurance ever tax deductible?) I assume not?
Yeah, kind of! COBRA premiums can be paid with HSA dollars, which have been accumulated tax-free.

See item 7: https://www.forbes.com/sites/robertberg ... 3b02c13e9e

And in more technical language: https://www.irs.gov/publications/p969#e ... 1000204020
"Happiness Is Not My Companion" - Gen. Gouverneur K. Warren. | (Avatar is the statue of Gen. Warren atop Little Round Top @ Gettysburg National Military Park.)

JBTX
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Re: COBRA alternative for 1 month? (it's $2,400 per month!)

Post by JBTX » Sat Jan 13, 2018 8:48 pm

Spirit Rider wrote:
Sat Jan 13, 2018 12:48 pm
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:
  1. ...The election period must not end before the date that is 60 days after the later of -
    1. The date the qualified beneficiary would lose coverage on account of the qualifying event; or
    2. The date notice is provided to the qualified beneficiary of her or his right to elect COBRA continuation coverage.
26 CFR 54.4980B-6 - Paying for COBRA continuation coverage, Q&A 5:
  1. 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 -
  2. 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.
Excellent post and totally agree.

JBTX
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Re: COBRA alternative for 1 month? (it's $2,400 per month!)

Post by JBTX » Sat Jan 13, 2018 8:52 pm

samsoes wrote:
Sat Jan 13, 2018 8:32 pm
samsmith wrote:
Sat Jan 13, 2018 5:24 pm
slightly off topic - but is cobra (or other insurance ever tax deductible?) I assume not?
Yeah, kind of! COBRA premiums can be paid with HSA dollars, which have been accumulated tax-free.

See item 7: https://www.forbes.com/sites/robertberg ... 3b02c13e9e

And in more technical language: https://www.irs.gov/publications/p969#e ... 1000204020
Yes they are as a medical expense itemized deduction subject to 7.5% AGI threshold.

stan_the_man
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Re: COBRA alternative for 1 month? (it's $2,400 per month!)

Post by stan_the_man » Sat Jan 13, 2018 9:28 pm

fsrph wrote:
Sat Jan 13, 2018 8:36 am
MikeT wrote:
Sat Jan 13, 2018 8:26 am
Hmm. According to this article:
http://www.mymoneyblog.com/cobra-and-re ... erage.html

"You have 60 days after you lose your benefits to elect to pay for COBRA coverage. However, even if you enroll on Day 60, your coverage is retroactive to Day 1. Of course, you’ll have to pay the retroactive premiums for that period. Thus, you could technically waive your COBRA coverage initially, and then wait to see if you incur any medical bills. If you manage to get on a new health plan on Day 30 or Day 55 with no medical bills, then you’ll still be guaranteed full coverage going forward and you won’t have paid anything during your gap. If you can’t find new coverage within 63 days or rack up medical bills higher than the premiums, then you can rescind your waiver and retroactively activate your COBRA benefits. Effectively, you get a do-over."
I agree with the principle of the article. But I would not initially waive cobra coverage. Just hold on to the cobra paperwork and decide later if you need coverage.

Francis
Never waive coverage.

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AAA
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Re: COBRA alternative for 1 month? (it's $2,400 per month!)

Post by AAA » Sat Jan 13, 2018 9:29 pm

I know someone who was told there'd be a two month delay in being covered on their new job and they opted for Obamacare. I thought the two month period without insurance was unusual as this person was a full-time employee the first day. It turned out that HR had given this person incorrect information and they were covered from the first day of work. Just mentioning this on the off chance that OP may be in a similar situation.

stan_the_man
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Re: COBRA alternative for 1 month? (it's $2,400 per month!)

Post by stan_the_man » Sat Jan 13, 2018 9:39 pm

One thing to note is that in this situation there would be no individual responsibility tax (individual mandate penalty) under the ACA.

The reason is that you can have a "less than three consecutive months" gap in coverage before the penalty would kick in. For the purpose of the penalty, having insurance for one day of the month is the equivalent of having insurance for the entire month -- so OP would only have a one month gap in coverage for the purpose of the penalty.

https://marketplace.cms.gov/technical-a ... verage.pdf

MikeT
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Re: COBRA alternative for 1 month? (it's $2,400 per month!)

Post by MikeT » Sat Jan 13, 2018 9:41 pm

It's good to always verify but as a new employee, I'd probably not want to question HR and get off on the wrong foot :-)

Finridge
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Re: COBRA alternative for 1 month? (it's $2,400 per month!)

Post by Finridge » Sun Jan 14, 2018 1:07 am

TwstdSista wrote:
Sat Jan 13, 2018 6:46 am
I believe the waiting period for COBRA will cover you. Yes, no insurance technically exists for that time period. But they will back track it if you elect to pick up the coverage.

Example: you see a doctor and need a prescription. For the doctor's $300, have them reissue the bill to the insurance once COBRA is elected and paid and Walla! You are covered. For the prescription, pay the full price at the pharmacy, then you submit to the insurance once COBRA is elected (and paid) and the insurance company should reimburse you.

This was my understanding of the issue when we opted for the one month of no coverage maybe five years ago.

(PS -- I know the correct term is "viola!" but I do not care)
I was in a similar situation and this was indeed the case. You can bet that I personally confirmed this myself, and you should as well, just in case the rules changed. But that is how it worked! I didn't have to pay anything. As long as I paid by the deadline my coverage was retroactive back to when I left the job! Just like you, I didn't want to pay because I had a new job starting (with new coverage), but I didn't want there to be a gap either.

This is back when I was a bachelor living with roommates. So, what I did is write out the check for payment of the COBRA fee and filled out the form electing coverage, and put this altogether with a stamped envelope and a note stating that it should be mailed out if I were involved in an accident. I also made sure to tell my roommates this, and made sure they knew where it was.

I'm not saying this is what you should do--but this is what I did.

MikeT
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Re: COBRA alternative for 1 month? (it's $2,400 per month!)

Post by MikeT » Sun Jan 14, 2018 6:37 am

Having the completed form, stamped, ready to go with instructions in case I get hit by a beer truck is a GREAT IDEA!!!

That's exactly what I'll do.

Now that I've fully confirmed the 'retroactive within 60 days' thing, I remain flabbergasted that the Director of HR at my firm didn't know this. #SHOCKING

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gasman
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Re: COBRA alternative for 1 month? (it's $2,400 per month!)

Post by gasman » Sun Jan 14, 2018 7:55 am

You might want to confirm the start date of coverage with new employer. Years ago my wife took job where coverage did not start till the first of the month plus 90 days after employment commenced.

MikeT
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Re: COBRA alternative for 1 month? (it's $2,400 per month!)

Post by MikeT » Sun Jan 14, 2018 8:23 am

Thanks, I verbally did confirm and have it in writing in my offer letter.

This thread has been enormously helpful.

Thanks everyone !!!

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Re: COBRA alternative for 1 month? (it's $2,400 per month!)

Post by technovelist » Sun Jan 14, 2018 9:34 am

I also have used the retroactive coverage provisions of COBRA to avoid paying large premiums for a short time.

It's about as clear as anything in the health insurance industry ever is.
In theory, theory and practice are identical. In practice, they often differ.

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dm200
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Re: COBRA alternative for 1 month? (it's $2,400 per month!)

Post by dm200 » Sun Jan 14, 2018 9:38 am

overthought wrote:
Sat Jan 13, 2018 6:17 pm
dm200 wrote:
Sat Jan 13, 2018 3:54 pm
Since many employer plans seem to cover the employee/family until the end of the month of termination, maybe you should try to leave one employer well before the end of the month to have continued coverage.
This. Old employer coverage is effective through end of the month employee leaves. New employer coverage often kicks in the first day of the month after employee's start date. So while it seems "clean" to end on the last working day of a month, it's actually better to end on the first working day of a month. I just changed jobs and specifically chose my resignation date as 2 Jan rather than 29 Dec to ensure coverage through the January gap. To their credit, this idea came from old company's HR dept. Though in my case it turned out to be unnecessary because new employer coverage turned out to be effective on the date of hire...
In the "good old days" I recall that it was common (almost universal) that employer health coverage started on the first day of employment.

Coverage to the end of the month of departure is common, but (as another posted) not universal. If it does go to the end of the month, then leaving early in the month can make the most sense.

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samsoes
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Re: COBRA alternative for 1 month? (it's $2,400 per month!)

Post by samsoes » Sun Jan 14, 2018 9:42 am

dm200 wrote:
Sun Jan 14, 2018 9:38 am

Coverage to the end of the month of departure is common, but (as another posted) not universal. If it does go to the end of the month, then leaving early in the month can make the most sense.
Careful - these plans can be thwarted if notice is given on Jan 19 for an anticipated last day of Feb 2 (two week notice period, with coverage through Feb 28). Some employers may tell you that your last day is Jan 31 for this very reason.
"Happiness Is Not My Companion" - Gen. Gouverneur K. Warren. | (Avatar is the statue of Gen. Warren atop Little Round Top @ Gettysburg National Military Park.)

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samsoes
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Re: COBRA alternative for 1 month? (it's $2,400 per month!)

Post by samsoes » Sun Jan 14, 2018 9:55 am

MikeT wrote:
Sun Jan 14, 2018 6:37 am
Having the completed form, stamped, ready to go with instructions in case I get hit by a beer truck is a GREAT IDEA!!!

That's exactly what I'll do.

Now that I've fully confirmed the 'retroactive within 60 days' thing, I remain flabbergasted that the Director of HR at my firm didn't know this. #SHOCKING
Just be critically aware -- as I mentioned earlier -- in the even you need to actually trigger COBRA, the dates are immovable, merciless, and unforgiving. Miss the payment date by one day, it's all over. Incorrectly write the check for the wrong (lesser) amount and it's not corrected by the due date, it's over. Check gets lost in the mail, over.

Last-minute brinkmanship can end badly.

The one time I actually had to pay for COBRA, I sent the paperwork and check via certified mail well in advance.
"Happiness Is Not My Companion" - Gen. Gouverneur K. Warren. | (Avatar is the statue of Gen. Warren atop Little Round Top @ Gettysburg National Military Park.)

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dm200
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Re: COBRA alternative for 1 month? (it's $2,400 per month!)

Post by dm200 » Sun Jan 14, 2018 10:19 am

Careful - these plans can be thwarted if notice is given on Jan 19 for an anticipated last day of Feb 2 (two week notice period, with coverage through Feb 28). Some employers may tell you that your last day is Jan 31 for this very reason.
Absolutely. I worked for such an employer in the 1980's. The day you gave notice was your last day. So, perhaps, give two weeks notice on Feb 1 (or 2) to be safe.

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Re: COBRA alternative for 1 month? (it's $2,400 per month!)

Post by MikeT » Sun Jan 14, 2018 7:55 pm

My HR director's boss got wind of the wrong answer I received that I needed to pay for cobra up front to be covered.

I expect I will be asked about it Tuesday. The Dept of Labor website FAQ wasn't as clear as this below. However, I think I'll call up Crawford and get the answer to them before the HR director gets thrown under the bus.

-----

I like the way they summarized it here:

https://www.insure.com/health-insurance/cobra-tips.html

"10. Even if you enroll in COBRA on the last day that you are eligible, your coverage is retroactive to the date you lost your employer-sponsored health plan.

COBRA beneficiaries have 60 days to decide whether they want COBRA coverage. If you enroll in COBRA before the 60 days are up, your coverage is then retroactive, as long as you pay the retroactive premiums. This means that if you incur medical bills during your "election period," you can retroactively — and legally — elect COBRA and have those bills covered."

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Re: COBRA alternative for 1 month? (it's $2,400 per month!)

Post by limeyx » Mon Jan 15, 2018 1:04 am

dm200 wrote:
Sun Jan 14, 2018 9:38 am
overthought wrote:
Sat Jan 13, 2018 6:17 pm
dm200 wrote:
Sat Jan 13, 2018 3:54 pm
Since many employer plans seem to cover the employee/family until the end of the month of termination, maybe you should try to leave one employer well before the end of the month to have continued coverage.
This. Old employer coverage is effective through end of the month employee leaves. New employer coverage often kicks in the first day of the month after employee's start date. So while it seems "clean" to end on the last working day of a month, it's actually better to end on the first working day of a month. I just changed jobs and specifically chose my resignation date as 2 Jan rather than 29 Dec to ensure coverage through the January gap. To their credit, this idea came from old company's HR dept. Though in my case it turned out to be unnecessary because new employer coverage turned out to be effective on the date of hire...
In the "good old days" I recall that it was common (almost universal) that employer health coverage started on the first day of employment.

Coverage to the end of the month of departure is common, but (as another posted) not universal. If it does go to the end of the month, then leaving early in the month can make the most sense.
Yeah this seems to be changing (at least for smaller companies) these days. Had this happen (1st of the next month) when I started my current job and had never heard of such a thing before that

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Re: COBRA alternative for 1 month? (it's $2,400 per month!)

Post by ClaycordJCA » Mon Jan 15, 2018 5:07 am

samsmith wrote:
Sat Jan 13, 2018 5:24 pm
slightly off topic - but is cobra (or other insurance ever tax deductible?) I assume not?
COBRA and other unreimbursed medical costs are tax deductible to the extent they are paid with after tax dollars and exceed the AGI threshold, which I believe is again 7.5%.

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