Laid off and offered COBRA, but a new job should be coming soon.

[Hyacinth]

Talk to me about insurance gaps.

 

The old policy has terminated (as of the layoff date a few weeks ago). We just got COBRA paperwork today (talk about Sticker Shock!). The letter says that we don't need to sign it right away and that it will be retroactive. We expect to be covered under a new employer within the next 6 weeks or so. 

 

So if we ignore the COBRA option (provided nothing catastrophic happens), we'll have about a 2-month lapse of coverage. This is bad, right? Why?

[scrapbookbuzz]

COBRA is expensive. Here are my two cents: If you tend to visit the doctor a lot due to recurring medical issues, then you might

want to get the COBRA coverage. If you and your family are in decent health and only visit the doctor when absolutely necessary, then

you probably don't need it. Also, you may be better off just paying OOP (out of pocket) for any doctor's visits in the next few weeks. Most

doctor's offices will work with you on payments, if needed. Honestly, unless you have a chronic illness, I don't really see a reason for spending 

money on COBRA when it could be better spent elsewhere.

[Hyacinth]

Yes, that's been our thinking as well. But what about these penalties for being uninsured? Will we incur them if we go that route? And how much is it?

 

(Related: My deepest admiration for any of you who navigated the healthcare.gov site and got sufficient answers to your questions.)

 

Ugh. Change.

 

 

[PeachyDoodle]

The COBRA should be retroactive to the date that your employer-paid coverage terminated. The letter you received should give the you deadline for signing up for COBRA coverage. It's usually several weeks.

 

We have always approached COBRA as a "sign up if and when we need it" kind of situation. If you need medical services sometime between now and the deadline to register, you can register at that time and still be covered retroactively. Be aware that you will have to pay the premiums going back to the first date of COBRA coverage, however. So far, we've been lucky and haven't had to use it.

 

You can incur a tax penalty if you have a gap in insurance coverage. I believe the penalty kicks in for a gap of longer than 60 days. I'm going off of memory here, so don't take my word for it.

Edited June 6, 2017 by PeachyDoodle

[Crimson Wife]

Get an exchange plan because it will be subsidized. Your children might get put on Medicaid because the income limit for children is fairly generous in many states.

 

With the replacement of Obamacare, you do NOT want any coverage gaps.

[idnib]

Before the latest political wrangling over healthcare, I would have suggested not paying for COBRA and activating it retroactively if an expensive medical bill came to pass during the gap. Now with discussions floating around about penalizing people who have had  gaps in coverage, I'm not as confident. I do know you get 3 months of not being covered under the ACA and you don't have to pay the penalty during tax time. However, the GOP plan currently being considered could cost you more in the long run:

 

The bill requires insurers to raise premiums 30 percent for anyone seeking to buy a policy on the individual market who had a lapse in coverage of 63 days or more in the previous year.

 

It's a bit of a gamble. 63 days is a bit more 2 months so you could be cutting it close. I'm not sure about grandfathering, and all that is subject to negotiation anyway.

[Crimson Wife]

We had to do Covered California for 2 months between jobs one time and it was horrible to enroll and then disenroll but cheap. They will base the cost off of unemployment benefits. You may need to pay back the subsidies out of your tax refund next spring but at least by then you will have an income coming in again.

[Hyacinth]

Yes, the current political situation has me concerned.

 

I found an IRS publication that speaks to a fee exemption for a "Short Gap in Coverage" (3 months).

[Hyacinth]

Before the latest political wrangling over healthcare, I would have suggested not paying for COBRA and activating it retroactively if an expensive medical bill came to pass during the gap. Now with discussions floating around about penalizing people who have had  gaps in coverage, I'm not as confident. I do know you get 3 months of not being covered under the ACA and you don't have to pay the penalty during tax time. However, the GOP plan currently being considered could cost you more in the long run:

 

 

It's a bit of a gamble. 63 days is a bit more 2 months so you could be cutting it close. I'm not sure about grandfathering, and all that is subject to negotiation anyway.

 

Thanks for that link!

[Arcadia]

But what about these penalties for being uninsured? Will we incur them if we go that route? And how much is it?

My husband's previous company COBRA package was close to $600 per person. We had a gap of a few days and the COBRA package came more than a month later after my husband had already started work at his current company. We have gone from one employer coverage plan to another so lapse in coverage between employments wasn't an issue.

 

For tax penalty,

"Anyone with a gap in health coverage of no more than 2 consecutive months can claim this exemption.

 

If anyone else on your tax return qualifies, you can claim this exemption for them too when you file your taxes.

 

You’re considered covered any month you had qualifying health coverage for even 1 day.

Example: You didn’t have coverage from March 2 to June 15. Your coverage gap was 2 months – April and May. You qualify for the exemption.

If your gap was 3 months or more, you can’t claim this exemption for any of those months.

Example: You didn’t have coverage any day in April, May, or June. You can’t claim this exemption for any of those months." https://www.healthcare.gov/exemptions-tool/#/results/2017/details/short-gap

 

So if your previous coverage ends in May, then only this month is counted as not having health coverage.

[AmandaVT]

I'd contact your state exchange and get on Medicaid for a month or so until he gets a new job. The way it works in our state is you'll be covered from the day you submit your application, though it may take a week or so for the coverage to show up on the provider website. Then, once he gets a new job, you can cancel it. 

[Janeway]

We went without. 8 months with no coverage. The kids got Medicaid but no one here took Medicaid so it was never used. I went through many many hours of applying and interviewing and being lectured to avoid a fine at the end of the year for not having insurance on the kids. But it really didn't cover anything.

[Carrie12345]

We went without. 8 months with no coverage. The kids got Medicaid but no one here took Medicaid so it was never used. I went through many many hours of applying and interviewing and being lectured to avoid a fine at the end of the year for not having insurance on the kids. But it really didn't cover anything.

 

It is REALLY hard to find someone taking Medicaid patients past the very beginning of the calendar year. I was horrified to learn about the annual caps used by doctors/practices when my relatives were staying with us.  All the phone calls in the world couldn't get them any better than an Urgent Care visit.  Zero well-care.

[Ravin]

It is REALLY hard to find someone taking Medicaid patients past the very beginning of the calendar year. I was horrified to learn about the annual caps used by doctors/practices when my relatives were staying with us.  All the phone calls in the world couldn't get them any better than an Urgent Care visit.  Zero well-care.

 

This varies drastically from one state (or even city) to another.

 

In Arizona, we never had a problem finding providers.

[lauraw4321]

Lapse in coverage = very bad, IMO. Pay it. It sucks, but pay it. Or find if you qualify for something cheaper. But don't let coverage lapse.

 

ETA: The potential of a fine for non-coverage wouldn't concern me. The ability of insurance companies to discriminate on the basis of pre-existing conditions would. If ACHA passes, they will be able to do that again if you have had a gap in coverage.

Edited June 6, 2017 by lauraw4321

[AmandaVT]

This varies drastically from one state (or even city) to another.

 

In Arizona, we never had a problem finding providers.

 

 

Yup - this is very state dependent. In VT, almost everyone takes Medicaid. Last I read, about one third of people in VT have Medicaid, so pretty much every Dr/Densist/Therapist takes it. They also pay about the same as other insurance companies and pay quickly, so there's no reason not to accept it here.

[Annie Elle]

My dh recently changed jobs and the cobra costs for our insurance gap was outrageous! We spoke to a local insurance broker and got catastrophic insurance coverage for our family for a very reasonable fee- less than $200 to cover us 60 days until his new insurance kicked in. It doesn't cover minor stuff but if something major happens like our teen driver gets in a bad accident then we are covered.

[Crimson Wife]

We went without. 8 months with no coverage. The kids got Medicaid but no one here took Medicaid so it was never used. I went through many many hours of applying and interviewing and being lectured to avoid a fine at the end of the year for not having insurance on the kids. But it really didn't cover anything.

 

But if God forbid there had been some sort of emergency, you could've gone to the hospital without worrying about racking up tens of thousands (or even hundreds of thousands) of medical debt.

 

It can be hard to find routine care providers that accept Medicaid as primary but the hospitals all accept it.

[Erica in OR]

Yes, that's been our thinking as well. But what about these penalties for being uninsured? Will we incur them if we go that route? And how much is it?

 

(Related: My deepest admiration for any of you who navigated the healthcare.gov site and got sufficient answers to your questions.)

 

Ugh. Change.

 

This page and its links could answer some questions, specific to 2017 gaps in coverage: https://www.healthcare.gov/health-coverage-exemptions/forms-how-to-apply/. The maximum gap is two consecutive months. If you have health care for even one day out of a month (like if your husband had coverage for June 1), all of June is not counted as part of the gap.

 

My husband and I needed to apply for an exemption for an unintended three-month gap in coverage in 2016. The paperwork was reasonable, but it was still extra to do, on top of the regular tax work.

 

Erica in OR