The Little-Known Obamacare COBRA Catch-22

Let's tell President Obama to close the gap

doctor taking surgery tools...

When I'm negotiating severance packages for employees, many times employers will offer to pay a month or more of COBRA payments. COBRA is the law that says employers have to let employees who lose their jobs stay on the company's insurance for up to 18 months as long as the employee pays 100% of the premium. Those premiums can be huge: $1,000 or more sometimes. Getting the employer to pick up some of the premiums can be a huge benefit.

Until now, that is.

The way that COBRA works is that your employer cuts your insurance off when you leave, then you get COBRA paperwork about 45 days later. When you elect COBRA and your employer or you pays the premium, you'll get coverage retroactively.

Under the Affordable Care Act, commonly known as ObamaCare, there was an open enrollment period that just expired on March 31, 2014. Before the end of open enrollment I was telling people to elect COBRA and then start applying for the exchanges so there was no gap. The exchanges are absolutely going to be cheaper than your COBRA. ObamaCare is a lifesaver, literally, for unemployed people who can't afford COBRA.

The next open enrollment isn't until November. Unless you qualify for the special enrollment period due to a change of circumstances, you have to wait until the next open enrollment to get covered by the exchanges.

You qualify for special enrollment if you lose your job or if your COBRA ends after open enrollment. Here's the kicker:

If you were on COBRA for even a month, you don't qualify for the special enrollment period until your COBRA period ends. You have to wait until the next open enrollment in November.

Loss of employment is a special circumstance that gets you into the special enrollment period, but failing to pay COBRA doesn't. You can choose between COBRA and Obamacare at the end of your employment, but you're stuck with your choice. To add to the confusion, I called the hotline for the exchanges, and they told me that if you even qualify for COBRA you don't qualify for the special enrollment, which is wrong according to the website, but it's an added problem that people will have to deal with. The ObamaCare website says this:

I'm leaving my job and will be eligible for COBRA. Can I shop for coverage and subsidies on the Marketplace instead?

Yes, leaving your job and losing eligibility for job-based health coverage will trigger a special enrollment opportunity that lasts for 60 days. You can apply for Marketplace health plans and (depending on your income) for premium tax credits and cost sharing reductions during that period. If you enroll in COBRA coverage through your former employer, however, you will need to wait to the next Marketplace open enrollment period if you want to switch to a Marketplace plan.

Here are your (completely s*#!y) choices if you lose your job after open enrollment:
  • Choose ObamaCare: Until November, the next open enrollment, if you want to go on ObamaCare you will have to now ask your employer to not pay COBRA as part of any severance package, but instead to give the you the money so you can choose ObamaCare instead of COBRA. It will be a challenge to educate employers on this problem, and even more of a challenge to get them to agree.

    The catch: You'll have a gap in coverage. You lost your insurance when you lost your job. The hotline guy I spoke with tells me that it takes 3 – 4 days to get ObamaCare coverage, and "possibly longer" due to delays. Plus, you probably waited awhile after you lost your job to start the process. That gap means any medical treatment you had between the time you lost your job and the time you get coverage will be out of your pocket.

  • Choose COBRA: If you elect COBRA because you have medical expenses you need covered retroactively, or because your employer is paying a month or more of it, you're stuck with it for seven months.

    The catch: You have to pay the outrageous premiums or lose coverage while you're waiting for the next open enrollment.

Here's what the ObamaCare website says about transitioning from COBRA to ObamaCare: "If you're planning to replace your COBRA coverage, it's important not to let your COBRA coverage end before your Marketplace plan starts. Otherwise there will be a gap in your coverage." No kidding. But after open enrollment, your choice is to get affordable health care and have that gap, or to pay the high COBRA premiums and skip paying, say, your mortgage.

This gap is, literally, a matter of life and death.

If you think this is a serious problem, tell President Obama by signing the petition I created. Do it today. I need 100,000 signatures to get the President's attention. This should be an easy fix. Let employees elect COBRA and then transition to ObamaCare. ObamaCare is a blessing for people who lose their jobs. Let's make sure they don't have to make this horrible choice between open enrollment periods.

Let's tell President Obama to close the gap.

Add a Comment

*0 / 3000 Character Maximum


Filter by:

Have Brother in Law whose wife worked for Hospital when she died he was on her Insurance. But before she died of CANCER she was an ex employee of the hospital that went on a MedicalLeave for a year and in that year she had to be put on COBRA insurance. The premiums for the two of them were 1400 a month and they had a 6,000 deductible as well. Unfortunatly she died during her treatment leaving the ex husband on COBRA for the remainder of the year MArch- December. He told me the premiums for hism by himself ( he had to establish a separate account ) through a 3rd party payer PAYFLEX. He now was paying $800 for himself with a $3200 deductible for 80/20 % coverage. He could not get the Affordible Health Care until the end of the fiscal year and then not until the enrollment period Prior to the upcoming year. They dont tell you that they must IDENTIFY you through your Tax records and a CC check through EXPERIAN, then you MUST ALSO SUBMIT your yearly Tax returns to the Affordable Health Care ( a subsidiary of the Health Education and Welfare department as well as to the IRS. All 3 of these things you MUST do or you will lose your coverage of the AHA at the reduced rates. After talking with my brother in Law seems like he would rather stay with COBRA for the next 18 months then deal with the Govt snooping on him. If he stops paying the COBRA even 1 month he loses coverage for the next 18 months! If he AHA people deny him coverage and returns to their Standard rates for AHA siver 2000/ 20 plan his rates jump to $100 More then what he is paying in COBRA $900 a monthand they dont include the Vision and Dental benefits he already has under the COBRA system. With every Govt program their are hidden conditions they don't tell you about till the last second. They also want you to file your Tax return with them by March of the year in question, even thouht the IRS and Congress say you have until April to file. What a crock of GOVT SNAFU..

January 24 2016 at 11:02 PM Report abuse rate up rate down Reply

Except for a few grandfathered plans that will be in place until 2015, the ACA did away with the loophole that let companies deny coverage for a pre-existing condition. ( That "gap" is no longer a crisis, unless you happen to incur bills that literally happen in that gap in coverage. (A car accident, heart attack, whatever.) Then it's an issue. But for someone with a chronic condition? Part of the ACA's purpose was to eliminate the issue with having a gap in coverage.

Also, "Obamacare" is not a "thing" like Medicare is. Drives me nuts that people don't seem to get that. It's an act. You don't sign up for it, you sign up under it, with a private insurance carrier or Medicaid. It's not an insurance plan. Congress doesn't need it because they already HAVE health care coverage. Many of us who are insured through our employers don't use the exchanges either. Nor are you forced to use the exchanges. If you have adequate funding, you are free to call any insurance company you like and get a plan directly from them, if they will sell individual plans.

April 23 2014 at 2:10 PM Report abuse rate up rate down Reply
1 reply to smokeandcircuses's comment

Except some Insurers "Cherry pick " the counties in which they serve in States. If you live in a poor or Rural county. Some Insurers will NOT offer coverage to those counties, based solely upon your zip code and the DEMOGRAPHICS of the income of the population that lives there. AETNA (Blue Cross and Shield) ,UMR and ANTHEM are famous for this..

January 24 2016 at 11:08 PM Report abuse rate up rate down Reply


April 15 2014 at 8:20 AM Report abuse rate up rate down Reply

Liberals are in for a tsunami of anti-Obamacare votes in the next election.
Oh, and I'm waiting for the typical liberal reply to my comment. That is, name calling and a personal attack. Bring it on. Make yourself look stupid.

April 09 2014 at 4:49 PM Report abuse +1 rate up rate down Reply
1 reply to wcivyman's comment

A lot of Self Employed Individuals that run companies refuse to put into the AHA because they must cover all of the employees at a Cost More then even Rent for their businesses. What would be the GOP alternative for these business owners to EXTEND coverage to their employees. BTW I counsel businesses as a financial advisor and I am independent and a Veteran..

January 24 2016 at 11:12 PM Report abuse rate up rate down Reply

Perhaps you fools that voted for these clowns in power can get coverage for your serious mental issues under Obamacare!

April 09 2014 at 3:54 PM Report abuse +1 rate up rate down Reply

If obamacare is so wonderful, why cant we have it all right now instead of having to wait until after the next elections to see what else kicks in and what effects it has? C'mon now, dont make us wait for all the good stuff, roll it all out right now!

April 09 2014 at 4:00 AM Report abuse rate up rate down Reply
1 reply to PERFORATOR's comment

The State of Massachusetts already has Universal Health Insurance in place before the AHA even existed. It was a plan of the Republican and former Presidential Republican candidate Mitt Romney. The affordible Health care act is based on a Republican led plan. Still I don't hear any alternatives to this plan and it was backed by elected GOP representatives when it was put into law..

January 24 2016 at 11:16 PM Report abuse rate up rate down Reply

Here's my question: just how many people find themselves in this 'gap'? Of the millions who have signed up, what percentage are in this situation? And what's the big deal about a month of dropped coverage? In how many months in your life would no health insurance have been a serious financial issue? I'm 63 and I'd say none--in my case. And I don't think the number of people impacted here is all that large, anyway. But someone this close to a problem has a need to magnify what could easily be worked around. Besides, chances are your old employers health policy is better than the one you're going to have under the ACA--because you have a choice as to your coverage, and I'd guess that most of us will start with the cheap policy.

April 09 2014 at 1:56 AM Report abuse rate up rate down Reply
1 reply to bdgrizcp's comment

gap in coverage could mean proving you dont have pre-existing probems can cause you to have huge bills. if you have a chronic problem like diabetes your new iunsurance can "penalize" you by not paying anything for anything related to your diabetes for a year if you have a gap in coverage fror 1 day. it is a big problem for some.

April 09 2014 at 4:31 AM Report abuse rate up rate down Reply
mark and sheri

More proof that the POTUS NEVER read the Bill. Neither has Reid, Pelosi, etc.
But they are given a pass because they are Progressive Liberals who "feel your pain."
By the way, the POTUS has insured the Insurance Companies will not lose any money, despite Progressive Liberals claiming they screwed up the historical system, were greedy. In bed with the supposed "enemy."
Does anybody ever tell the American People the truth?

April 09 2014 at 1:08 AM Report abuse +3 rate up rate down Reply
1 reply to mark and sheri's comment

ObamaCare sucks - that is as close to the truth as I can get.

April 09 2014 at 2:56 AM Report abuse +2 rate up rate down Reply


April 09 2014 at 1:03 AM Report abuse +3 rate up rate down Reply

Socialized medicine - socialism is against everything that is American.

April 09 2014 at 12:34 AM Report abuse +3 rate up rate down Reply
1 reply to BRYANT's comment

Yea like slavery and oppression . Its not Socialism its doing
the right thing . YOU JERK!

April 09 2014 at 1:49 AM Report abuse -3 rate up rate down Reply

Search Articles

Picks From the Web