Posted On: February 20, 2014 by Patrick A. Malone

Health Insurance Reform — What Happens When COBRA Runs Out?

This week, in one of our occasional posts on the Affordable Care Act (ACA, or “Obamacare”), we address what happens when someone has insurance through COBRA, (Consolidated Omnibus Budget Reconciliation Act), which enables some employees to continue health insurance coverage after leaving their jobs. The information is provided by KaiserHealthNews.org (KHN).

Q. I am currently insured under COBRA. It expires in August 2014. I have a pre-existing condition and I’m unemployed. Can I apply for a plan under the ACA sometime in June for coverage that will start in September? Is there something I should do now before the end of March?

A. When people lose or leave their jobs, they can opt to continue their work-based health insurance under the federal COBRA law. Such policies do qualify as health coverage under the ACA, and it’s not necessary to do anything before the open enrollment period for coverage on the federal and state marketplaces ends March 31. But some marketplace plans might offer similar coverage for a better price, Laurel Lucia, a policy analyst at the University of California-Berkeley Labor Center, told KHN.

People with pre-existing conditions might be concerned that marketplace, or exchange, plans could involve switching doctors or high deductibles. But maybe not.

Although most bronze-level plans — coverage and cost are divided into four levels, bronze, silver, gold and platinum — have high deductibles, higher-level gold and platinum plans have lower cost-sharing. So, if you’re a high-use consumer, it might make financial sense to choose a plan with higher monthly premiums but lower medical costs.

And many people, especially the unemployed and underemployed might be eligible for tax credits on their premium costs and cost-sharing subsidies. But you’re probably paying the entire COBRA premium in addition to an administrative fee.

Once open enrollment ends — in this case, March — you generally can’t shop for an exchange plan until the next open enrollment period in the autumn. But certain circumstances or life events trigger a special enrollment period, and exhausting your COBRA benefits is one of them. So if you decide to keep COBRA coverage until it runs out, you will be able to sign up on the state or federal exchange at that time. If the questioner in this case wants to keep COBRA until it expires, he or she can get coverage starting Sept. 1 if he or she signs up by Aug. 15.

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