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Covered California and Obamacare related questions from consumers, employers and agents are answered by Phil Daigle with the best information available at the time. Archived entries may no longer be accurate as the Covered California and Obamacare knowledge-base is evolving quickly. TO REQUEST A PERSONAL RESPONSE INCLUDE EMAIL ADDRESS.


Special Enrollment and COBRA?

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Question: My husband was laid off mid march. The insurance at the company he worked for was valid through 3/31. As part of his severance package...the company is paying for COBRA till 7/1 which is when we would then be responsible for paying COBRA payments. The insurance through his current plan is very expensive and we would like to "shop" for our own insurance. We will not qualify for assistance as our income is just above the cut off. When is the last date we can apply/start paying for our own coverage other than the COBRA in order to take complete us. COBRA says we can drop them at anytime so that is not a issue.

Answer: You have a special enrollment period due your eligibility for COBRA until 6/1/14 (60 days from termination of group coverage), during which you can purchase an individual plan either in-exchange (subsidy) or off-exchange (no-subsidy). You can drop COBRA anytime, but you must apply for individual coverage before 6/1/14. If you apply through the exchange, indicate that "loss of coverage" is your qualifying event. If you opt for COBRA instead, it will remain your only option for the rest of 2014.

6 Comments

Cole … Not sure what you mean by “exceptional circumstances” … the words in the law and regulations are “Special Enrollment Periods” and you can read about it here (and elsewhere): http://www.law.cornell.edu/cfr/text/45/155.420

Thanks for the responses Phil and Max - so the person in this situation electing the COBRA as of 4/1/14 can apply by 6/1/14 for an individual plan and drop their COBRA.

Is there/where can I find a definition of exceptional circumstances or does that cover all situations?

Glad they changed that as I’m sure this would have caused quite a few problems.

Thanks again!

Cole, the opinion you present was accurate until very recently - 5/2/14 - when federal guidelines were released affecting COBRA beneficiaries. HHS is concerned that former Model COBRA Continuation Coverage Election Notices did not address, or did not sufficiently address, Marketplace options for COBRA beneficiaries. Thus, COBRA beneficiaries may have had insufficient information to understand they only can enroll in QHPs in the Marketplace during the open enrollment period and special enrollment periods as described above. As a result, in accordance with 45 CFR 155.420(d)(9), HHS is providing an additional special enrollment period based on exceptional circumstances so that COBRA beneficiaries are able to select QHPs in the exchange until July 1, 2014.

The interpretation of HHS and IRS was that COBRA continuation can now be terminated at any time. Previously, a person would have had to exhaust COBRA continuation before eligibility for a HIPAA conversion plan.

Most of HIPAA has been rendered moot by the PPACA’s “full implementation” (fractured as it was) on 1-1-2014. This allowed persons who were continuing under COBRA to drop their coverage effective 1-1-2014, and enroll in individual health insurance. They also had until 3-31-14 to do the same.

Now that open enrollment has ended, a person who is in the midst of COBRA continuation cannot terminate that participation and enroll in an individual health plan under the “Special Enrollment Period” opportunity. So, to that extent, Cole’s comment is accurate.

But that is not the situation in the original posting. When a person loses their employment, this creates the 60-day Special Enrollment Period opportunity in the answer above. 60-days is important because this is the same number of days one has to elect COBRA continuation. The former employee has two options — continue the employer plan at up to 102% of the total cost (up to 18 months), or enroll in an individual health plan on- or off-the-exchange.

As I previously wrote, it may be advisable to continue under COBRA for the remainder of the year, and enroll in an individual plan in the October 15-December 7 open enrollment period later this year. One needs to look at the totality of the situation as it exists today — current group coverage vs individual coverage, premiums, out-of-pocket expenses, etc. It is not necessarily a simple decision.

Are you sure about this? I checked with a couple carriers (ABC, BS, Cigna) and they said that once you elect COBRA you have to wait until an open enrollment period even if you are still within your special enrollment?

Make sure you do an apples to apples comparison of the group coverage and its cost compared to individual coverage and its cost.

In the group plan, any medical expenses to date are probably counted toward the deductible and out-of-pocket limit for the year. You may not obtain credit for than when enrolling in an individual plan and can end up paying a lot more out-of-pocket compared to the COBRA continuation premium.

You have some time left to make an informed decision. It might be best to consult a licensed Accident & Health Agent, or a Life and Disability Insurance Analyst, to help you with the numbers. (I am both. There are only 29 L&D Analysts in California, compared to more than 150,000 agents.)

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