COBRA Questions

[DermRes]

Hi there,

 

Finished training this year, with my residency health insurance covering me through June 30. I received my COBRA paperwork, but my understanding is I can activate COBRA 'retroactively' up to 60 days, so my plan has been to NOT pay for COBRA coverage unless something happens that I need to (unfortunate accident, etc.). Have envelopes with the premium checks already in, and a friend who knows where they are/to send them in if something were to happen where I couldn't.

 

My main questions are….

1) Am I interpreting COBRA right that I can activate retroactively and avoid paying the premiums if I don't end up needing it?

2) My health insurance at my new job won't start until November 1st (sucks, I know) so I will need coverage for September and October (COBRA covering July/August….) to avoid paying penalties for going 2+ months without health insurance, right?

3) Same scenario for my wife with leaving her job to move to my new job location, but her last job covered her insurance through the end of July. Can she use COBRA August/September (but only send in the premiums if necessary), then I will need to purchase her insurance coverage for October until I can add her to my insurance in November as well?

 

Overall, this approach would keep me and my wife with available health insurance at all times if we were to need it, but minimizes the amount we have to outlay to get through this awkward gap period.

 

Thanks in advance for everyone's help.

[conniebird]

Hey there, fellow derm here

I paid for COBRA - I thought about the retrospective stuff (it IS true, you can activate after the fact for 60 days) - but I just wanted to sleep better at night. I was also traveling quite a bit abroad and didn't want to chance it.

Also, you can do it retro but you'll be footed with a huge possible bill and may take time for reimbursement. I would just do it.

I think you need it to avoid the penalty of not having insurance anyway.

I had to pay for July-Sept I think. My premium was around $400.

 

 

[Hatton]

I would just pay for it.  I agree with Conniebird you will just sleep better.

[DermRes]

Thanks for the input, but I think I have to disagree. If I don't have to pay the premiums, I'm going to avoid it - obviously, with the caveat that I would never go a day without having the possibility of getting coverage if I need it (by retroactively activating COBRA).

 

I can go 60 days of COBRA (and only pay retroactively if I need it) which will then count as my two uninsured months (can't go "3 consecutive months" without coverage per the new Affordable Care Act laws before penalty kicks in), at which point then I will purchase the cheapest coverage I can until my insurance kicks in Nov 1.

 

My main question for the group then is simply: is this a correct interpretation of the rules surrounding health insurance such that I won't incur a penalty AND I at least have the ability to become covered at all times should I need it?

 

Thanks.

[Jim]

You're making a fool's bet.  So come Sept 1, and you haven't had any catastrophic accidents over the summer, what are you going to do?  You have to either A) pay the back premiums for July and August to COBRA, and then also pay Sept and Oct COBRA premiums, or B) find "the cheapest coverage [you] can" for Sept & Oct.  The cheapest coverage probably will be COBRA anyway, since it is presumably at group rates.

You're an attending now.  While I would never advise you to be a spendthrift and "waste" money, this is a small amount of money to spend for the peace of mind it will give you.  Just pay it.

 

[jfoxcpacfp]

DermRes wrote:

My main question for the group then is simply: is this a correct interpretation of the rules surrounding health insurance such that I won’t incur a penalty AND I at least have the ability to become covered at all times should I need it?

Click to expand...

Yes, this is correct. With so much conversation on this forum devoted to grinding out a few extra miles from one credit card or the other, the .3% spread of using a credit card to make estimated tax payments, and the time spent finding the best savings account for emergency funds to earn a few hundred extra dollars a year, the comments above are rather startling to me (imho).

[DermRes]

Thanks Johanna for answering what I was actually asking.  

 

For the doubters - let's talk figures:

Scenario A - activate COBRA until new job coverage kicks in:

COBRA coverage would be $600/month just to cover myself, and if I elect to activate it, I am going to have to pay it for July, August, September, and October so $600/month x 4 months = $2,400

 

Scenario B - don't activate COBRA (unless I need to retroactively), but purchase new coverage on the Marketplace before my 60 day window expires on Aug. 29:

Cheapest plan that would cover me if catastrophe were to strike on the Marketplace = $175/month, and I would need it for Aug to Sept, Sept to Oct, and a couple pro-rated days to get me from Oct 29 to Nov 1….so essentially $175/month x 2 months = $350

 

In both scenarios I am 'fully covered' at all times, but with Scenario B I save $2,050 bucks. I know which one I am going to do…..hopefully this helps other people in the same situation save some money as well!