Covered California Creates Limited Special-Enrollment Period for Those Covered by COBRA

Posted on

COBRA Enrollees Have 60 Days to Switch to an Exchange Plan; Move Is Expected to Save California Consumers Money on Health Insurance

Beginning Thursday, May 15, Covered California will launch a limited-time special-enrollment period for people who have COBRA health insurance 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, 2014. 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 until 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, particularly if they qualify for subsidies, 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 who would like to take advantage of this limited special-enrollment period can apply at the Covered California website and select “Other qualifying life event” during the special-enrollment application process.

Ready to sign up? Need more information or want help making the best decision for you? For more information, call Alex Rue Insurance today at 916-572-9815 or email alex@alexrue.com


What is COBRA?
The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) requires most employers with group health insurance plans to offer employees the opportunity to continue their coverage under their employer’s plan even after termination, layoff or other change in employment status.

When employers offer health coverage, they usually pay part of the monthly premium for their employees. After losing a job, COBRA allows you to continue to be in the employer’s group plan, but you will likely have to pay the full cost of the premium, plus an administrative fee.

Do I have to enroll in COBRA after losing a job?
You are not obligated to participate in COBRA. If you decline the initial offer of COBRA and are therefore newly uninsured, you will qualify for special enrollment in a Covered California health insurance plan. To take advantage of the special enrollment period, you must apply for and select a Covered California plan no more than 60 days after your employer coverage ends.

New information: If you are eligible for or currently enrolled in COBRA coverage, you can enroll in a Covered California health insurance plan through July 15, 2014.

If I lose employer health coverage, how do I decide whether to enroll in COBRA or in a health insurance plan through Covered California?
The choice of which program to enroll in is up to you, but here are some factors to consider when deciding between COBRA and a Covered California health insurance plan:

What doctors and hospitals are available in each plan?
What is the total monthly premium for you and your dependents?
What are the copays and deductibles in the various plans?
You may qualify for tax credits to help pay for a health plan with Covered California. These tax credits may make a difference when you are comparing the cost of COBRA and Covered California plans. The Shop and Compare Tool can help estimate tax credits and the cost of a plan with Covered California.

COBRA coverage and Covered California plans qualify as sufficient coverage to avoid the tax penalty, so choose based on cost and the doctors and medical services that are best for you.

I currently have COBRA. Can I cancel it and enroll in a Covered California health insurance plan?
New information: If you are eligible for or currently enrolled in COBRA coverage, you can enroll in a Covered California health insurance plan through July 15, 2014.

It’s important to know that if you decide to drop COBRA and enroll in a Covered California plan, you cannot change your mind and go back to COBRA. If you drop COBRA, you will not be able to return to your plan.

After July 15, 2014, you cannot drop your COBRA plan and enroll in a Covered California plan unless it is an open enrollment period at Covered California. You will not be eligible for special enrollment if you stop paying your COBRA premium or cancel your COBRA. After July 15, 2014, you will not be eligible for a special enrollment unless someone responsible for remitting payments for your COBRA premium (for example, your former employer) fails to do so on a timely basis, you move out of the plan coverage area and there is no COBRA continuation coverage available, or you reach your plan’s lifetime limit for benefits. If none of these reasons apply, and unless you have another qualifying life event for special enrollment, you will have to wait until the next open enrollment period to cancel your COBRA and sign up for a Covered California health insurance plan. The next open enrollment period will be in the fall of 2014.

When will my Covered California health insurance plan be effective if I enroll during the special enrollment period for COBRA (May 15 – July 15, 2014)?
Your coverage start date depends on when you select a plan and pay the premium to your new plan. If you complete plan selection by June 15, with payment of initial premium by the due date, coverage starts on July 1. If you complete plan selection by July 15, with payment of initial premium by the due date, coverage starts on Aug. 1.

Do I have to cancel my COBRA plan before enrolling in a Covered California plan
No. Using the plan start dates described above, you can plan to cancel your COBRA plan the day before your Covered California plan takes effect.

How do I apply for a Covered California health insurance plan?
You can apply online at CoveredCA.com. These important tips will help you in the application:

When asked about your reason for special enrollment, select “other qualifying life event.”
Enter the date you are applying as the date of your event.
When the application asks if you have other health coverage, select “None” even if you currently have a COBRA plan.
You will need to select a plan and pay the health insurance company before your coverage will be effective.
My employer agreed to pay for a few months of my COBRA coverage. Can I enroll in a Covered California health insurance plan after my employer stops paying for my COBRA?
No, if your employer pays your COBRA premium for a limited time and then stops paying your COBRA premium, that loss of COBRA will not qualify you for special enrollment in a Covered California plan. If you go without health insurance coverage, you may face a penalty when you pay your taxes. You can enroll in a Covered California health insurance plan during open enrollment. The next open enrollment period will be in the fall of 2014.

Ready to sign up? Need more information or want help making the best decision for you? For more information, call Alex Rue Insurance today at 916-572-9815 or email alex@alexrue.com