Will health insurance company prematurely provide letter of termination?

[Mr. Green]

My wife's last day at work is June 29th. I have begun the process for enrolling in the ACA but they will require a letter confirming loss of health insurance coverage before they will allow us to pick a plan and pay the first month's premium. That letter can come from my wife's employer, our current insurance company, or COBRA. COBRA is not an option because our new coverage needs to start 2 days after my wife's last day at work. Her employer is being difficult about providing a letter. I can try calling UnitedHealthcare but I'm doubtful that they would provide such a letter before coverage was actually terminated because something could change at the last minute. Has anyone gotten a letter from their health insurer prior to the actual termination of coverage that has allowed them to complete the ACA open enrollment process?

[Chrissy]

You're not going to get a letter confirming the loss of coverage until the loss actually occurs.

You can enroll in the ACA after you lose coverage, because that's a qualifying event.

Meanwhile, COBRA has a 60-day enrollment period that is retroactive.

So, lose the coverage, ask for the letter, wait up to 60 days knowing you can pay for and be covered by COBRA if something happens during that window, receive letter, enroll in ACA.

[Mr. Green]

You're not going to get a letter confirming the loss of coverage until the loss actually occurs.

You can enroll in the ACA after you lose coverage, because that's a qualifying event.

Meanwhile, COBRA has a 60-day enrollment period that is retroactive.

So, lose the coverage, ask for the letter, wait up to 60 days knowing you can pay for and be covered by COBRA if something happens during that window, receive letter, enroll in ACA.

So I guess worst case scenario is we have to pay for expensive COBRA because ACA insurance isn't retroactive. Even if my wife's health insurance ends on June 30, if the ACA hasn't approved the special open enrollment period and we haven't paid the premium by July 1 then we'd have no insurance. But then COBRA messes with our ACA application because now we're using COBRA insurance so we'd have to reapply under different parameters. What a PITA. We try to move her last day to July 3rd or something so we can get the termination of coverage letter in time for the ACA application if the employer won't provide a letter.

[Chrissy]

I've never seen this play out IRL, but, yes, that's my understanding.

Can she write the letter herself on company letterhead and have HR or her manager sign it?  It seems bonkers that they aren't providing this.

[Paul der Krake]

Normally I would tell you to enjoy being premium-free for the 2-month COBRA grace period, but reading between the lines it sounds like you have an actual health condition that requires constant coverage. Or am I reading too much into this?

The key is to leave at the beginning of the month, leaving you the rest of the month with employer-paid coverage. To the best of my knowledge, that's how most employers handle coverage.

So by pushing your wife's date to July 2 or 3, she gets coverage for all of July. Then if she's healthy, the optimal move is to drag your feet and be "uninsured" for August and September, knowing that she can always sign up for Cobra if something dramatic were to happen. Then she signs up for the ACA for a October 1 coverage start date. If she's not healthy, have the ACA coverage start August 1.

[Mr. Green]

Normally I would tell you to enjoy being premium-free for the 2-month COBRA grace period, but reading between the lines it sounds like you have an actual health condition that requires constant coverage. Or am I reading too much into this?

The key is to leave at the beginning of the month, leaving you the rest of the month with employer-paid coverage. To the best of my knowledge, that's how most employers handle coverage.

So by pushing your wife's date to July 2 or 3, she gets coverage for all of July. Then if she's healthy, the optimal move is to drag your feet and be "uninsured" for August and September, knowing that she can always sign up for Cobra if something dramatic were to happen. Then she signs up for the ACA for a October 1 coverage start date. If she's not healthy, have the ACA coverage start August 1.

We're both healthy, so it's not that we couldn't go for a month or two without insurance but I really don't like the idea, especially since we're both FIRE at that point and plan to do some travelling. Another negative effect is that the ACA individual mandate is still in effect for 2018, so if we're uninsured for those two months we'll have to pay a fine for not having it.

[Paul der Krake]

There is an automatic exemption if your lapse of coverage is for less than 3 months, so you wouldn't have to pay the penalty:
https://www.irs.gov/affordable-care-act/individuals-and-families/questions-and-answers-on-the-individual-shared-responsibility-provision#Exemptions

That being said, I agree that it's a little ridiculous to go through these hoops just to save a couple hundred bucks when you're retired. The real value of the exemption is to have a fallback should the ACA marketplace not deliver in a timely manner. I think pushing your wife's retirement date back (or forward!) to the beginning of the month is well worth it.