How COBRA Eligibility Affects Your Ability to Get Obamacare

Stethescope and Capital.
Image©Frances Twitty E+/Getty Images

Are you losing your job, getting divorced, newly widowed, or aging off of a parent’s job-based health insurance? If so, you’re likely eligible for COBRA continuation health insurance. You’re probably also eligible for a special enrollment period on your Obamacare health insurance exchange.

However, you need to understand how your COBRA eligibility interacts with your Obamacare eligibility. It’s all about the timing.

Here’s what you need to know to get COBRA and Obamacare right.

If You’re Offered COBRA, You Can Enroll in Obamacare Instead…If You Time It Correctly

You have a limited period of time after the qualifying event (losing your job or getting divorced, for example) to sign up for COBRA. This COBRA election period is usually 60 days, but can sometimes be a bit longer. If you don’t sign up for COBRA coverage during your COBRA election period, you’ll lose the opportunity; there are no second chances to get COBRA coverage.

That same qualifying event also makes you eligible for a 60-day special enrollment period on your Affordable Care Act health insurance exchange. During this special enrollment period, you can sign up for an Obamacare plan even though you’ve been offered COBRA health insurance. Your COBRA offer won’t prevent you from enrolling in an Obamacare plan during your special enrollment period.

However, if you wait so long after the triggering event that your 60-day special enrollment period is over, you can’t sign up for an Obamacare plan until the next annual open enrollment period.

Once you’ve started COBRA, if you decide you want to switch to an Obamacare plan instead, you can only do this during open enrollment on the Marketplace or if you become eligible for another special enrollment period due to an additional qualifying event.

Here’s an example. Let’s say you lose your job on January 1 and sign up for COBRA on January 25. On February 15, you decide you made a mistake and want to drop your COBRA coverage. You want to sign up for a Marketplace plan instead. You’ll have to wait until next autumn’s open enrollment period before you’re allowed to sign up for a Marketplace plan since you’ve already elected COBRA. However, in June, you get married. Your change in family size qualifies you for a new special enrollment period on the Marketplace. During this special enrollment period, you may sign up for an Obamacare plan, but you’ll have to drop your COBRA coverage when your Marketplace plan takes effect.

Lost Your COBRA? Your Ability to Get Obamacare Depends on Why You Lost COBRA.

The reason you lost your COBRA coverage will determine whether or not you can sign up for an Obamacare plan before the next Marketplace open enrollment period.

If you lost your COBRA health insurance because your COBRA continuation period of 18-36 months expired, you’re eligible for a special enrollment period on the Marketplace when your COBRA runs out.

If you voluntarily canceled your COBRA coverage before your 18-36 months of COBRA was exhausted, you won’t be eligible for special enrollment. You’ll have to wait until the next open enrollment period to sign up for an Obamacare plan.

If your COBRA coverage was terminated because you didn’t pay your premiums, you’re not eligible for a special enrollment period on the exchange. Unless you qualify for a special enrollment period for a different reason, you won’t have the opportunity to enroll in Obamacare until the next annual open enrollment period.

COBRA coverage can affect your ability to get an Obamacare subsidy. If your income is less than 400% of federal poverty level, make sure you understand how the choices you make about COBRA coverage impact your ability to get help paying for health insurance. Learn more in “How COBRA Affects Your Obamacare Health Insurance Subsidy.”

How Much Does COBRA Health Insurance Cost?

COBRA Vs Obamacare—Which Is Better?

Sources

FAQs About COBRA Continuation Health Coverage, Employee Benefits Security Administration, United States Department of Labor. http://www.dol.gov/ebsa/faqs/faq-consumer-cobra.html Accessed July 10, 2015.

Special Enrollment Period, Glossary, HealthCare.gov. https://www.healthcare.gov/glossary/special-enrollment-period/ Accessed July 9, 2015.

COBRA Coverage and the Marketplace, HealthCare.gov https://www.healthcare.gov/unemployed/cobra-coverage/  Accessed July 9, 2015.

Health Reform FAQs, tag: COBRA, Kaiser Family Foundation. http://kff.org/health-reform/faq/health-reform-frequently-asked-questions/#tag-cobra Accessed July 18, 2015.

Continue Reading