COBRA under American Rescue Plan

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SuzBanyan
Posts: 563
Joined: Thu Jun 02, 2016 11:20 am

COBRA under American Rescue Plan

Post by SuzBanyan »

It looks like I failed to understand the implications of the provision of the American Rescue Act that gave free COBRA (and Cal-COBRA) coverage from April to September 2021. I thought it didn’t apply to me because I terminated COBRA at the end of 2020 and switched in January 2021 to a Covered California plan. The plans (and networks) were almost identical, but the full cost of the ACA plan was $300 less per month and much less with a subsidy.

I just was notified by my COBRA insurer that I am eligible to re-enroll in COBRA. This would mean free coverage for 3 months (I already missed out on the 1st 3 months of free coverage). But, it would mean switching plans for June through September then going back to Covered CA in October through the end of the year. I think I would save as much as $1500 in premiums, but it it might be only less than $600. It depends on how my income shakes out for this year.

I’m on a HDHP, so I’m assuming I would start my deductible again with each switch to a new policy. Any other issues about which I should be aware?
KlangFool
Posts: 20896
Joined: Sat Oct 11, 2008 12:35 pm

Re: COBRA under American Rescue Plan

Post by KlangFool »

SuzBanyan wrote: Tue Jun 08, 2021 9:14 pm It looks like I failed to understand the implications of the provision of the American Rescue Act that gave free COBRA (and Cal-COBRA) coverage from April to September 2021. I thought it didn’t apply to me because I terminated COBRA at the end of 2020 and switched in January 2021 to a Covered California plan. The plans (and networks) were almost identical, but the full cost of the ACA plan was $300 less per month and much less with a subsidy.

I just was notified by my COBRA insurer that I am eligible to re-enroll in COBRA. This would mean free coverage for 3 months (I already missed out on the 1st 3 months of free coverage). But, it would mean switching plans for June through September then going back to Covered CA in October through the end of the year. I think I would save as much as $1500 in premiums, but it it might be only less than $600. It depends on how my income shakes out for this year.

I’m on a HDHP, so I’m assuming I would start my deductible again with each switch to a new policy. Any other issues about which I should be aware?
SuzBanyan,

Under the American Rescue Act, the ACA subsidy had increased. And, if you are eligible for at least one month of unemployment benefit, your ACA insurance should be fully subsidized. So, before you go down the COBRA route, you may want to find out the impact of the American Rescue Act on your existing ACA insurance.

This is my imperfect understanding. You should re verify the information.

KlangFool
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Topic Author
SuzBanyan
Posts: 563
Joined: Thu Jun 02, 2016 11:20 am

Re: COBRA under American Rescue Plan

Post by SuzBanyan »

KlangFool: Thanks for your thoughts. I have already received a reduction in my ACA, which is reflected in the lower range of my savings from 3 months of free COBRA. Unemployment is extremely unlikely; instead I expect that my income will be higher than estimated.

I have certainly done crazier things in the past to save less money. But this feels like taking pretty wild ride to me. And the savings fall apart if I have to pay for even a single month on COBRA. Which means I have to be eligible for a special enrollment period to sign up for Covered CA in October. Everything I read says there “may” be a special enrollment period. Sigh.

The savings may also disappear if I have to meet 3 separate high deductibles before year end.
KlangFool
Posts: 20896
Joined: Sat Oct 11, 2008 12:35 pm

Re: COBRA under American Rescue Plan

Post by KlangFool »

SuzBanyan wrote: Wed Jun 09, 2021 7:51 am KlangFool: Thanks for your thoughts. I have already received a reduction in my ACA, which is reflected in the lower range of my savings from 3 months of free COBRA. Unemployment is extremely unlikely; instead I expect that my income will be higher than estimated.

I have certainly done crazier things in the past to save less money. But this feels like taking pretty wild ride to me. And the savings fall apart if I have to pay for even a single month on COBRA. Which means I have to be eligible for a special enrollment period to sign up for Covered CA in October. Everything I read says there “may” be a special enrollment period. Sigh.

The savings may also disappear if I have to meet 3 separate high deductibles before year end.
SuzBanyan,

<<if you are eligible for at least one month of unemployment benefit,>>

Please note that the specific language. You just have to be eligible. You do not have to receive the unemployment benefit. As per COVID-19, the eligibility for unemployment benefit had changed. For example, in some cases, reduce hours/income qualify you for unemployment benefit.

In summary, you may want to re-verify and confirm that.

KlangFool
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Topic Author
SuzBanyan
Posts: 563
Joined: Thu Jun 02, 2016 11:20 am

Re: COBRA under American Rescue Plan

Post by SuzBanyan »

KlangFool wrote: Wed Jun 09, 2021 8:12 am
SuzBanyan wrote: Wed Jun 09, 2021 7:51 am KlangFool: Thanks for your thoughts. I have already received a reduction in my ACA, which is reflected in the lower range of my savings from 3 months of free COBRA. Unemployment is extremely unlikely; instead I expect that my income will be higher than estimated.

I have certainly done crazier things in the past to save less money. But this feels like taking pretty wild ride to me. And the savings fall apart if I have to pay for even a single month on COBRA. Which means I have to be eligible for a special enrollment period to sign up for Covered CA in October. Everything I read says there “may” be a special enrollment period. Sigh.

The savings may also disappear if I have to meet 3 separate high deductibles before year end.
SuzBanyan,

<<if you are eligible for at least one month of unemployment benefit,>>

Please note that the specific language. You just have to be eligible. You do not have to receive the unemployment benefit. As per COVID-19, the eligibility for unemployment benefit had changed. For example, in some cases, reduce hours/income qualify you for unemployment benefit.

In summary, you may want to re-verify and confirm that.

KlangFool
After I was laid off last year from a W-2 position, I expanded what had been my side gig. By March, 2020, that dried up and I did apply for and receive unemployment form several months. My self-employment income recovered late last year and I now expect this year’s income to be much better than last. As a result, I don’t believe I will be eligible for at least one month of unemployment benefit in 2021.
livelovelaugh00
Posts: 117
Joined: Sun Dec 25, 2016 8:15 pm

Re: COBRA under American Rescue Plan

Post by livelovelaugh00 »

KlangFool wrote: Tue Jun 08, 2021 9:24 pm
Under the American Rescue Act, the ACA subsidy had increased. And, if you are eligible for at least one month of unemployment benefit, your ACA insurance should be fully subsidized. So, before you go down the COBRA route, you may want to find out the impact of the American Rescue Act on your existing ACA insurance.
Thanks! Great information. I will do some comparison. (What a great time to retire.)
VanGar+Goyle
Posts: 19
Joined: Sat May 29, 2021 1:31 pm

Re: COBRA under American Rescue Plan

Post by VanGar+Goyle »

How many times can you switch between ACA and COBRA?

I expect end of year, after 18 or 36 months of COBRA coverage ends, but the midyear switches are odd.
This year an open enrollment period for ACA goes to Aug. 15,
According to healthcare.gov, You may qualify for a Special Enrollment Period if you lose individual health coverage,
if your household income decreased, and now you qualify for savings on a Marketplace plan.
KlangFool
Posts: 20896
Joined: Sat Oct 11, 2008 12:35 pm

Re: COBRA under American Rescue Plan

Post by KlangFool »

VanGar+Goyle wrote: Fri Jun 11, 2021 6:30 am How many times can you switch between ACA and COBRA?

I expect end of year, after 18 or 36 months of COBRA coverage ends, but the midyear switches are odd.
This year an open enrollment period for ACA goes to Aug. 15,
According to healthcare.gov, You may qualify for a Special Enrollment Period if you lose individual health coverage,
if your household income decreased, and now you qualify for savings on a Marketplace plan.
VanGar+Goyle,

<<How many times can you switch between ACA and COBRA?>>

1) As far as I know, if you sign up for this COBRA subsidy from 4/1 to 9/30, the end of subsidy aka 9/30 is a special enrollment period. Please verify.

2) The bigger problem is switching reset your deductible. It may or may not be a problem for you.

<<if your household income decreased, and now you qualify for savings on a Marketplace plan. >>

3) This statement is not exactly correct. ACA cliff (4 X FPL) had been eliminated for 2021 and 2022. So, you always qualify for a subsidy regardless of the income level. Except at the higher income level, the subsidy amount could be very small or zero.

KlangFool
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