Author Topic: Calling all COBRA experts!  (Read 1418 times)

Omy

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Calling all COBRA experts!
« on: June 13, 2019, 09:36:01 AM »
DH and I intend to FIRE next month and will probably take advantage of COBRA since the ACA marketplace options are more expensive and our MAGI is too high to qualify for subsidies.

I'm assuming that by 2021 (assuming the ACA is still in tact), we might be able to figure out how to get our income under $65k to qualify for a bit of subsidy. But if not, I've also considered getting a job with group health insurance to see if I enjoy the work...then ride COBRA out for another 18 months if I'm not enthralled. Does anybody do that? Is it ethical? It feels a bit slimy, but my intention would be to work for an organization that I am interested in (not JUST to qualify for insurance). Thoughts on being a serial COBRA user?

CptCool

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Re: Calling all COBRA experts!
« Reply #1 on: June 13, 2019, 09:48:03 AM »
DH and I intend to FIRE next month and will probably take advantage of COBRA since the ACA marketplace options are more expensive and our MAGI is too high to qualify for subsidies.

I'm assuming that by 2021 (assuming the ACA is still in tact), we might be able to figure out how to get our income under $65k to qualify for a bit of subsidy. But if not, I've also considered getting a job with group health insurance to see if I enjoy the work...then ride COBRA out for another 18 months if I'm not enthralled. Does anybody do that? Is it ethical? It feels a bit slimy, but my intention would be to work for an organization that I am interested in (not JUST to qualify for insurance). Thoughts on being a serial COBRA user?

What is 'ethical' is determined by the person. I personally don't think it's unethical to choose your place of employment based on the benefits package offered.

One other option for the rest of 2019 is that most (maybe all? not sure) COBRA plans allow you to back-pay multiple months. This is definitely more grey area as far as ethical concerns go, but you could simply not carry insurance and then if something big happens where it's needed, you pay the COBRA insurer the backpay. Then when it runs out either pay out of pocket for medical or get an ACA marketplace plan after the COBRA plan no longer covers the backpay months. I would definitely meet with a CPA or tax specialist now to determine ways to optimize for 2020 so you can meet the threshold for lower ACA payments though

rantk81

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Re: Calling all COBRA experts!
« Reply #2 on: June 13, 2019, 12:56:51 PM »
I've thought of this as a FIRE health insurance strategy too -- especially useful for people who are in markets which only have really crappy doctor networks on all the ACA exchange plans (cough, Chicago, cough.)

Step 1: Get a job with a decent group plan
Step 2: After a short time, if you don't "absolutely love" the job, quit and begin COBRA.
Step 3: After about a year, when there's only 6 months of COBRA left, start looking for another job with a decent group plan
Step 4: Repeat

Might be problematic ff there's a recession where jobs become really scarce again -- but 6 months is a lot of time to find a job.

Omy

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Re: Calling all COBRA experts!
« Reply #3 on: June 13, 2019, 01:25:17 PM »
Exactly. In another thread, @chasesfish pointed out that the likely reason that COBRA was cheaper than our marketplace plans was that the corporate group plan probably had a healthier pool of peeps than the marketplace. That means it would be best to work for organizations with lots of young, healthy people to keep your future COBRA rates down.

jim555

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Re: Calling all COBRA experts!
« Reply #4 on: June 13, 2019, 01:29:23 PM »
COBRA is not cheap most of the time.  My Megacorp COBRA was priced at about full price Platinum ACA plans.

Proud Foot

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Re: Calling all COBRA experts!
« Reply #5 on: June 13, 2019, 01:34:17 PM »
If COBRA is cheaper than ACA then I don't have a problem with doing what rantk81 outlined. It will depend on obviously how the economy is doing but also the size of the market you live in. A lot easier to do in a large market with many employers. As far as your question of it being ethical, as long as you are not quitting the day after you become eligible and enrolled in their health plan I don't personally have a problem with it.

use2betrix

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Re: Calling all COBRA experts!
« Reply #6 on: June 13, 2019, 01:36:53 PM »
Dealing with the 3rd party cobra broker through my previous employer was likely one of the most stressful things I have dealt with in many years. The most unorganized, poorly put together system ever. Such a disaster.

Omy

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Re: Calling all COBRA experts!
« Reply #7 on: June 13, 2019, 01:38:08 PM »

One other option for the rest of 2019 is that most (maybe all? not sure) COBRA plans allow you to back-pay multiple months. This is definitely more grey area as far as ethical concerns go, but you could simply not carry insurance and then if something big happens where it's needed, you pay the COBRA insurer the backpay. Then when it runs out either pay out of pocket for medical or get an ACA marketplace plan after the COBRA plan no longer covers the backpay months. I would definitely meet with a CPA or tax specialist now to determine ways to optimize for 2020 so you can meet the threshold for lower ACA payments though

I would probably skip the game of waiting to sign up for COBRA. I agree that we need to try to optimize our situation to reduce MAGI. We have a couple of rentals (and dividends and gains, etc) that will make it tricky.

Omy

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Re: Calling all COBRA experts!
« Reply #8 on: June 13, 2019, 01:41:54 PM »
Dealing with the 3rd party cobra broker through my previous employer was likely one of the most stressful things I have dealt with in many years. The most unorganized, poorly put together system ever. Such a disaster.

Can you tell me more? I thought you just signed up, paid monthly, and then you dealt with Blue Cross directly if you had claim issues. What am I missing?

use2betrix

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Re: Calling all COBRA experts!
« Reply #9 on: June 13, 2019, 03:56:29 PM »
Dealing with the 3rd party cobra broker through my previous employer was likely one of the most stressful things I have dealt with in many years. The most unorganized, poorly put together system ever. Such a disaster.

Can you tell me more? I thought you just signed up, paid monthly, and then you dealt with Blue Cross directly if you had claim issues. What am I missing?

There was a 3rd party company that handled the finances and set up with blue cross blue shield. This has been 2-3 years ago but I definitely recall very heated, very stressful phone calls. Probably a good thing they were close or I would have driven to their office and punched someone in the face.

I paid my money, and after 3 weeks of them not activating my insurance (though they took the money) I ended up just cancelling for a refund. It was one of the most pathetic waste of time and poor customer service I have dealt with in memory.

chasesfish

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Re: Calling all COBRA experts!
« Reply #10 on: June 13, 2019, 08:55:42 PM »
Glad @Omy tagged me on here.

COBRA administration can suck, I don't know why it has to be so difficult, but it does all come down to price.  If your employer has a healthier pool (or better network) than your ACA plans, COBRA makes sense.

For a random example, I have one former client with 500 or so employees with a much younger demographic.  Their insurance cost (employer + employee contribution) 70% or so of the comparable ACA plan.  If the ACA gets out of hand, I could figure out a work remote arrangement with that company. 

SwordGuy

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Re: Calling all COBRA experts!
« Reply #11 on: June 13, 2019, 11:12:51 PM »
Whatever you do, if you're staying on COBRA, know when the company typically renegotiates health insurance and requires people to sign back up again.

They may forget to contact you to tell you, particularly if they are a small company.

I found out this very morning that my prior employer had done just that.  At the moment I'm in a grey area.   Hopefully it will all get taken care of tomorrow and there won't be any issue with reimbursing.

They changed plans and service providers so my auto-payment didn't happen this month.

EricEng

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Re: Calling all COBRA experts!
« Reply #12 on: June 14, 2019, 01:26:11 AM »
I always found COBRA to be way more expensive.  It is not the same premiums you paid while employee.  It is your premiums+employer's share of premiums.  At my company for family plan that's $2,500 from me and $15,000 from company per year.  I can find better plans for under $17,500 on ACA.

chasesfish

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Re: Calling all COBRA experts!
« Reply #13 on: June 14, 2019, 05:18:15 AM »
@EricEng Your profile says Colorado, it also happens to be one of the healthiest state in the country = better pool of insured individuals for the ACA

stoaX

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Re: Calling all COBRA experts!
« Reply #14 on: June 14, 2019, 03:51:56 PM »
Since most group medical insurance rates are based on the demographics of the population they cover and / or the claims experience of that particular group, COBRA can be more expensive than unsubsidized age-graded ACA rates if you are a young person.  My COBRA rates are cheaper than unsubsidized age-graded ACA rates because I am 58 years old.

And the thought of getting a benefits eligible job once my COBRA expires has crossed my mind.  But I think I'll cross that bridge when I come to it. 

Omy

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Re: Calling all COBRA experts!
« Reply #15 on: June 15, 2019, 05:45:44 AM »
Thank you for all of your replies. It's nice to know this approach is potentially repeatable for those of us who may not qualify for ACA subsidies - and I appreciate the info on COBRA administration hassles and issues. Anybody else have COBRA "challenges" to share?

DaMa

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Re: Calling all COBRA experts!
« Reply #16 on: June 15, 2019, 02:48:54 PM »
Dealing with the 3rd party cobra broker through my previous employer was likely one of the most stressful things I have dealt with in many years. The most unorganized, poorly put together system ever. Such a disaster.

Can you tell me more? I thought you just signed up, paid monthly, and then you dealt with Blue Cross directly if you had claim issues. What am I missing?

There was a 3rd party company that handled the finances and set up with blue cross blue shield. This has been 2-3 years ago but I definitely recall very heated, very stressful phone calls. Probably a good thing they were close or I would have driven to their office and punched someone in the face.

I paid my money, and after 3 weeks of them not activating my insurance (though they took the money) I ended up just cancelling for a refund. It was one of the most pathetic waste of time and poor customer service I have dealt with in memory.

@use2betrix  Do you know who the 3rd party was?  I recently had a horrible experience with Conduent, a TPA, and filed a complaint with the DOL. 

COBRA can cost far far more then you realize.  If your employer has different subgroups, they can put the COBRA in the highest cost group.  This is especially nasty if your employer has non-Medicare retirees.  One of my employer had this, but only for people who hired in over 10 years ago.  So even though new people, like me, could never have retiree health coverage, we had to pay that rate for COBRA.  Based on what my employer and I paid for my benefits, I thought COBRA would be $800 per month.  It was $1800.