Covered California announced on May 15, 2014 that they will follow the HHS guidance and offer a Special Enrollment Period (SEP) for individuals and families currently on a COBRA health plan. However, people should be cautious before they leave their COBRA plan and jump into a Covered California plan for many reasons.
Cautions for COBRA SEP
The Department of Health and Human Services determined that notices sent to people enrolled in a COBRA health plan may not have been clear enough about their options for enrolling in an ACA health plan. The SEP allows people to enroll in health plan outside of open enrollment. This SEP for COBRA started May 15 and will last until July 15, 2014.
Expensive COBRA premiums
One big reason to leave COBRA and move to a private plan offered through Covered California is the price. COBRA tends to be expensive and there may not be any employer contribution to lower the monthly premium. While the high premium may be enough reason to leave COBRA, you may be losing certain benefits that the COBRA plan offers.
COBRA plans usually have larger physician and hospital networks because they mirror small and large group health plans. If you or a member of your household is currently receiving medical treatment, you may not be able to keep those doctors with a new ACA health plan. You might have to change physicians, hospitals or other providers disrupting the health care.
Deductible, Copay and Coinsurance
When you leave you COBRA and start a new health plan the clock resets on the deductible amount. If you have already met your deductible, and possibly the annual maximum out of pocket amount, you will have to meet the deductible again under a new Covered California health plan if the plan you select has one. You will certain lose credit for all health care expenses you may have incurred that added to your meeting your annual maximum out of pocket amount. The new health plan may actually cost more in the long run with having to pay new copayments and coinsurance.
Tax Credit Eligibility
Even though you are able to purchase a plan through Covered California with SEP for COBRA, it doesn’t mean you will be eligible for the Advance Premium Tax Credit. If the previous COBRA plan you are dropping has a premium of less than 8.5% of the household income, then you won’t be eligible the tax credit to reduce the premium. See also The COBRA catch with income.
The SEP is a nice opportunity to move from a potentially very expensive COBRA plan to a more moderately priced individual and family plan through Covered California. You just have to weigh all the pluses and minuses of making the transition if you have been actively using your COBRA and incurring health care expenses through it.
Full Covered California agent email announcement
COVERED CALIFORNIA CREATES LIMITED SPECIAL-ENROLLMENT PERIOD FOR THOSE
COVERED BY COBRA
COBRA Enrollees Have 60 Days to Switch to an Exchange Plan; Move Is Expected to Save California Consumers Money on Health Insurance
SACRAMENTO, Calif. — Beginning Thursday, May 15, Covered California will launch a limited-time special-enrollment period for people who have COBRA health insurance, either Federal COBRA or Cal-COBRA, and would like to switch to an exchange plan.
People who have health coverage through COBRA (the Consolidated Omnibus Budget Reconciliation Act) will be eligible to shop for and buy coverage through Covered California from May 15 through July 15. The two-month window mirrors a U.S. Department of Health and Human Services (HHS) ruling announced May 2 that allows COBRA enrollees to buy plans through the federal exchange up to July 1.
The federal policy for the COBRA special-enrollment period was approved amid concerns that notifications did not give consumers clear information about options in the new marketplace. HHS encouraged state exchanges to follow suit.
“COBRA coverage has given vital protection for nearly three decades to people who lost coverage from their employers, especially those who couldn’t get affordable insurance because of their age or a pre-existing condition,” said Covered California Executive Director Peter V. Lee. “Since the passage of the Affordable Care Act, plans in the individual market could be preferable to COBRA coverage because of premium assistance and cost-sharing reductions, available only through the exchanges. For some people who have COBRA coverage, purchasing a plan in the Covered California marketplace during this special-enrollment period could save thousands of dollars a year.”
Under COBRA, individuals who experience a job loss can purchase the coverage they had through their employer but are responsible to pay the full cost. In some cases, individuals and families can purchase more affordable coverage in the health benefit exchanges.
“COBRA will continue to be a cornerstone of coverage for workers after a job loss, but it’s important for employees to know that there are options in the marketplace that could save them money,” Lee said.
This newest category of special enrollment joins a host of “qualifying life events” under the federal Patient Protection and Affordable Care Act that allow consumers to get exchange coverage during a time when open enrollment is not available. Other events include losing coverage, having a child, getting married and moving.
COBRA enrollees, either on Federal COBRA or Cal-COBRA, who would like to take advantage of this limited special-enrollment period can apply at the Covered California website and select “Other Qualifying Event” during the special-enrollment application process.
For more information, visit https://www.coveredca.com/faqs/cobra/