Author Topic: Cobra or not for 2 week gap?  (Read 28191 times)

aneel

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Cobra or not for 2 week gap?
« on: April 10, 2015, 07:42:34 AM »
I'm taking two weeks off between jobs.  My job supplies benefits for myself and my spouse, both healthy.  The question is whether or not to activate COBRA benefits to fill the gap.  We have no long term conditions.  I am however very active, trail running and biking will take up a large portion of my 2 week break, I've never hurt myself doing these things before but murphy's law/fear has got me thinking on whether I'm OK with having an insurance gap.  I'd like to hear your opinions on my following options:
1 - just have a gap - there is no tax (ACA) penalty for a gap this short and this is free (unless one of us needs emergency medical care)
2 - elect COBRA coverage for both spouse and myself for a cost of ~$1250 (holy COW)
3 - elect COBRA just for me for a cost of ~ $500

4 - another option I haven't thought of, but I'm sure you can help me here!

Thanks so much for your insight!

mskyle

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Re: Cobra or not for 2 week gap?
« Reply #1 on: April 10, 2015, 07:43:36 AM »
You can usually get Cobra retroactively - obviously check to make sure that this is the case. So in your case I would not pay for Cobra, but I would get all the paperwork ready to send in in case one of you gets hit by a truck in those two weeks.

mikesinWV

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Re: Cobra or not for 2 week gap?
« Reply #2 on: April 10, 2015, 07:47:26 AM »
Are you sure that you won't have benefits from the old employer during that two week break?  Typically when your employer pays for HI they pay for the entire month.  So, if your last day is say today, the 10th of April, you TYPICALLY have HI thru the end of April from your old employer. 

charis

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Re: Cobra or not for 2 week gap?
« Reply #3 on: April 10, 2015, 08:10:48 AM »
I recently left a job and had the same situation. I kept my health care through the end of the month - so whether my last day was the 2nd or the 31st, I'd have coverage through the 31st.  In my case, my last day was the 28th and my new coverage did not start until the 14th of the next month.  So I actually had, in theory, a 2 week coverage gap.

I say "in theory" because COBRA mandates that your former employer allow you to extend your health coverage when it terminates because you have left that job if you apply/pay the COBRA premium within 60 days of your coverage terminating, in my experience, and it is retroactive to that date.  So the gap is only a gap if you don't get the COBRA coverage before your 60 days is over.

I didn't even get the COBRA paperwork until after my new health coverage started.  No one needed medical care during that two weeks, so we had no need to pay the premium to cover the gap.  We are a family of 4, btw.

Bear in mind that you may have longer than a two week gap if you are taking two weeks off before you start the new job.  Talk to your HR rep at the new job, because most health care is not effective until after you have been working for a little bit.

DK

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Re: Cobra or not for 2 week gap?
« Reply #4 on: April 10, 2015, 08:18:11 AM »
When do your new benefits go into effect?

You would be covered until the end of the month when you leave, then COBRA can be done retroactively up to 60 days. If your new benefits go into effect before then, I would not get COBRA. Have things ready to apply if something does happen in that timeframe though.

mskyle

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Re: Cobra or not for 2 week gap?
« Reply #5 on: April 10, 2015, 08:23:35 AM »
I've noticed a couple of people saying that your current employer coverage will continue to the end of the month, and I used to think that was always true, but it's not; many companies cut you off as soon as you leave. It's their prerogative.

charis

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Re: Cobra or not for 2 week gap?
« Reply #6 on: April 10, 2015, 08:38:36 AM »
I've noticed a couple of people saying that your current employer coverage will continue to the end of the month, and I used to think that was always true, but it's not; many companies cut you off as soon as you leave. It's their prerogative.

The OP obviously has to verify everything on his end.  But it is typical that one would have coverage to the end of the month since the employer likely paid for insurance for the whole month.

rubybeth

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Re: Cobra or not for 2 week gap?
« Reply #7 on: April 10, 2015, 08:57:27 AM »
I am very risk averse, so I would want coverage.

If your coverage does indeed end on your last day of work (verify), and your coverage with new employer does not begin until whatever date  they decide (also verify), could you get a short term plan to cover you between the two jobs? I seem to recall this being an option when looking on eHealthInsurance's website a while ago. I also wonder if you could ask your new employer about beginning coverage early, and paying that premium yourself for the first month or whatever until your coverage kicks in.

charis

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Re: Cobra or not for 2 week gap?
« Reply #8 on: April 10, 2015, 09:24:35 AM »
I am very risk averse, so I would want coverage.

If your coverage does indeed end on your last day of work (verify), and your coverage with new employer does not begin until whatever date  they decide (also verify), could you get a short term plan to cover you between the two jobs? I seem to recall this being an option when looking on eHealthInsurance's website a while ago. I also wonder if you could ask your new employer about beginning coverage early, and paying that premium yourself for the first month or whatever until your coverage kicks in.

COBRA is retroactive.  You get the coverage if you need/want it.  There is no risk involved since you are not actually without the coverage as long as you pay for it - it is uninterrupted.  Very few people actually understand what COBRA means, I find.

aneel

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Re: Cobra or not for 2 week gap?
« Reply #9 on: April 10, 2015, 09:43:59 AM »
Thanks everyone!  You were all very helpful.  I have been told that my coverage is completely terminated the day I quit which is 5/1.  My new job starts on 5/18 and benefits are active immediately.  I think getting the paperwork together and not paying unless its necessary is the way to go.  My friend in HR also advised this retroactive method as well.  I feel like this board just paid me $1200!

LiveLean

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Re: Cobra or not for 2 week gap?
« Reply #10 on: April 10, 2015, 09:44:06 AM »
I took a nine-week absence from a job years ago at the age of 24. (Too bad it wasn't the Obama era, I wouldn't have to worry!) But my employer, a Fortune 500 company, made if very clear I needed to pay for Cobra ASAP and that I would not be otherwise covered.

Admittedly, I probably could have gone without. Hey, I was 24. But I'm risk averse and my return to the company was not guaranteed. (They took me back.) I've thought of this several times over the years when I've had an emergency appendectomy, a kidney stone that required immediate surgery, and during the last year when I've dealt with injuries from a bad auto accident where the at-fault driver had minimal insurance. Yes, that's more of an auto/PIP and uninsured motorist insurance coverage issue, but still, you'll never catch me uncovered.

charis

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Re: Cobra or not for 2 week gap?
« Reply #11 on: April 10, 2015, 10:07:49 AM »
I took a nine-week absence from a job years ago at the age of 24. (Too bad it wasn't the Obama era, I wouldn't have to worry!) But my employer, a Fortune 500 company, made if very clear I needed to pay for Cobra ASAP and that I would not be otherwise covered.

They gave you the wrong information.  By statute, if you are entitled to COBRA coverage, your employer must give you 60 days to choose whether to continue coverage. 

http://www.dol.gov/dol/topic/health-plans/cobra.htm

DK

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Re: Cobra or not for 2 week gap?
« Reply #12 on: April 10, 2015, 12:22:22 PM »
And really, if you want to play it - it's 60 days from when they notify you, and then you have a 30 day window to pay, so it's almost 3 months you can "have" insurance without having to pay for it. I actually played that since my out of pocket costs were lower than the coverage was going to be - unfortunately I did not get replacement benefits within that 90 day window so had to pay for it (that was a big check) and then retro'd the things I paid out of pocket to get the insurance cost of it.