COBRA and a Special Enrollment Period with the Affordable Care Act

Losing or quitting your job can be a very tough time. It can be confusing, especially when your benefits are tied to your employment. Even more complicating is  that the Affordable Care Act may seem confusing.

Although it seems like you’re out of luck, that’s likely not the case. Even though you will be losing your position with your employer, you do have a few options when it comes to your health insurance plan.

Your first option is to look for other coverage.

If you or your employer ended your employment, you may have experienced a qualifying life event that triggers a Special Enrollment Period. This means you would be able to enroll in a new individual or family health plan through because of the Affordable Care Act. This can be a relief, especially if you don’t have another job to start that offer employees a group health plan.

Your other option is to continue on your employer’s group health plan.

COBRA is a law established in the 1980s that essentially requires employers with 20 or more employers to offer employees a continuation of the employer’s group health coverage at the expense of the employee.

 

Before you choose one or the other though, you should know a little more about each option.

Let’s start with using the event as a trigger to a Special Enrollment Period. Some examples of “job loss” or “job change” that could be a qualifying life event that would trigger a Special Enrollment Period:

  • Reduction of hours that leads to your health benefits being cut;
  • Being laid off;
  • Quitting your job for any reason; or
  • Losing your job for any reason;

If you’ve experienced any of these and as a result, lost your employer’s group health coverage, you are in a Special Enrollment Period. That means you have 60 days from your termination date to enroll in a qualified health plan.

 

COBRA is different.

 

COBRA stands for the Consolidated Omnibus Budget Reconciliation Act. It is a law that gives employees the right to pay premiums for and keep the group health insurance that they would otherwise lose when their employment is terminated, by either the employer or the employee for reasons other than “gross misconduct.” Remember that this only applies to employers who offered group health plans and have more than 20 employees. COBRA information is usually mailed to you by your previous employer and should arrive within 45 days of the termination date.

 

You or your spouse and dependents can elect for COBRA in any of the following situation:

  • Reduction in employee’s hours of employment;
  • Termination of employee’s employment (for any reasons other than gross misconduct on the employee’s part);
  • Death of the employee;
  • End of the employee’s marriage;
  • Employee becomes entitled to Medicare;
  • A child of a covered employee ceases to be considered a dependent; and
  • Determination of disability under the Social Security Act;

 

BUT, before you elect COBRA, you need to keep two things in mind:

COBRA continuation is very expensive! Instead of just paying a part of the premium, and your employer paying most of it, if you elect for COBRA, your payment= your contribution + your employer’s contribution + a 2% administrative fee.  That totals 102% of the premium.

You must use all 18 or 36 months of COBRA. You can stop paying for your expensive premiums, or cancel COBRA continuation or coverage at any time, BUT you must remember that voluntarily quitting other health coverage or being terminated from a health plan for not paying premiums is NOT a qualifying life event. That means you would NOT be eligible for a Special Enrollment Period and would not be able to enroll in a qualified health plan.

There are more types of qualifying events; Our advisors are ready to help consumers find out if their life event qualifies them for a Special Enrollment Period. These licensed advisors can be reached at 1-877-279-7959.

Remember that you will likely need supporting documentation to prove that you had a qualifying life event. In this case, it could be a termination letter from your employer, or a letter from your employer stating that you are no longer on their group health plan.

 

If you know you’re in a Special Enrollment Period, you can enroll now! You can click here for an online quote and enroll online, or you can speak with one of our licensed advisors no by calling them at 1-877-279-7959.

If consumers have not experienced a qualifying life event that allows them to enroll in a qualified health plan, and they do not choose to elect COBRA, there health plans that are available year-round to help cover individuals and families. Though these plans are not qualified health plans, and may not help consumers avoid the tax penalty, the plans will protect consumers in case something does happen.  These alternate plans can include:

  • Short Term Medical Insurance. These plans usually provide coverage from 30 days up to twelve months at a time. They typically do not cover pregnancy, preventative care, or pre-existing conditions, but they can provide a limit to a consumer’s financial liability for medical bills in case of hospitalization.
  • Accident Insurance. These insurance plans have a cash payout if the consumer suffer from specifc injuries. If a specific injury does occur, the payout is made to the consumer rather than to a medical provider. This way, the consumer can use the money for whatever they chose.
  • Critical Illness Insurance. This plan works similarly to an accident insurance plan, but is meant to provide a cash payout if the consumer is diagnosed with a serious, life-threatening illness.

 

Keep in mind too that these plans can decline coverage based on your medical history, pre-existing conditions or other risk factors because they are not qualified health plans.

 

For more information about how to get enrolled in these alternate plans, click here to get a quote. Or to find out if you have experienced a qualifying event that could put you in a Special Enrollment Period, call a licensed advisor today at 1-877-279-7959 or .