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Changing Jobs: Insurance Coverage, Cobra and the Affordable Care Act

Legal Disclaimer: I’m not a health care expert, but I am changing jobs and did a fair bit of research to figure out how switching jobs will impact my insurance and liability under the Affordable Care Act.  I thought I would share, since finding this information was not as straightforward as I had hoped. Keep in mind that this is NOT legal advice! Even though I am lawyer, I am not your lawyer, and everyone’s insurance can be a little different. So make sure to talk to your HR person to ensure that you have all the right information for your specific situation.

At my current job, my insurance runs for the whole month, so if I work just one day in that month, I am covered until the end of the same month.

At my new job, insurance coverage begins on the first of the month after the day you start. So, for example, if I started work on September 2, 2014, I would not be covered by their insurance until October 1, 2014.

This could result in about a month-long insurance gap for me.  There are two considerations with this:

  1. Could I be subject to a penalty under the Affordable Care Act (Obamacare)?
  2. What happens if I get hit by a bus during that period?

Answers:

(1) Fortunately, if you only have a small gap in coverage (less than 90 days), there is no penalty under Obamacare. Score!

(2) But what about that bus? (Knock wood!)  Well, it turns out that most businesses offer Cobra. (Businesses with more than 20 employees are usually required to offer this by law; ask your HR person.)   Cobra is essentially an option to pay your own insurance premium to maintain the insurance that your current employer offers, even after you have a “qualifying event.”  In other words, Cobra is a legal requirement that your boss allows you to maintain the company’s insurance even after stop working there.  Usually you will be responsible for paying the premium; your employer will not pay it, but you can stay on the same plan.  It’s not exactly cheap to buy this type of insurance, but it may be a good option for some.

But, Rachel, what is a “qualifying event?” In my case, the “qualifying event” is leaving my current job. It is usually anything that causes you to lose coverage. More info is here.

When you have a qualifying event (leave your job), you are given a form by your HR person that gives you 60 days* to decide whether you want to enroll in Cobra.  When you do sign up, the coverage applies retroactively back to the date of the qualifying event.  So if between the time that I leave my job and before the 60 days are up, if I get hit by a bus, I can then sign up for Cobra after the bus accident and those medical expenses would be covered as if I never had any gap in coverage. Great, right?

The other good part is that if at the end of 60 days, I have not encountered any buses or other tragic mishaps (god willing), then I do can choose not to sign up for Cobra, pay no additional money and not be subject to the Affordable Care Act penalty.  Keep in mind that this only works were your final day of insurance at your current job is less than 60 days before the date on which your new insurance would kick in – otherwise, you don’t get the luxury of waiting to see if something happens to you during that gap, you may have to pay the premium for Cobra before your new insurance starts.

Here is some [marginally] useful information about who is exempt from Obamacare penalties, about how Cobra works, and what to do if your employer does not offer Cobra.

I hope you found this somewhat helpful, even though it doesn’t involve cookies or painting or power tools.

And, remember to look both ways before crossing the street!

With love,

Rachel

P.S. KNOCK ON WOOD!!!!

* The 60 days begins from the latest of either: the date of the qualifying event, the date that coverage actually ends due to the qualifying event, or the date on which you learn that you are required to inform your HR person and health plan about a qualifying event.  In my case, the 60 days will start on the day my insurance ends – the last day of the month in which I stop working.

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