Cobra and the Marketplaces (Exchange) : When Can a Cobra Continuee Drop Cobra and Move to the Exchange?
October 16, 2013
The Marketplaces, the new name for Exchanges, are offering an Open Enrollment period each year that will run from October 15 through December 7. This year’s 2013 Open Enrollment is extended.
Once the Open Enrollment closes, a consumer generally must experience a “special enrollment event” to enroll in a Marketplace plan outside of an open enrollment period. The loss of other health coverage is one of these events. In the definitions, recent guidance has stated that the “loss of other health coverage” includes the “exhaustion of Cobra.” Where does this leave a Cobra continue who voluntarily drops cobra coverage?
There is another “special enrollment event” in addition to the “loss of other health coverage.” It is being “determined newly eligible for subsidized coverage.” Yet, enrollment in Cobra coverage, as employer sponsored-coverage, generally precludes eligibility for a subsidy. An individual who voluntarily drops Cobra may be eligible to enroll in Marketplace coverage if cessation of Cobra causes the individual to be newly eligible for a subsidy. This means that based on MAGI, the individual’s income qualifies for subsidy and Cobra coverage is dropped.
If an individual is not “newly eligible for subsidized coverage,” then the individual is eligible to enroll in Marketplace coverage only at the exhaustion of Cobra or at the Open Enrollment.
Interestingly, both Pennsylvania and New Jersey have Individual insurance offerings very similar or identical to the plans and rates offered on the Exchanges. For these plans offered outside the Exchanges, coverage could be purchased, and it appears without the need to prove a “special enrollment event.” Will the individual plans outside of the Exchanges adopt the same rules as the Exchanges/Marketplaces for “special enrollment events?”
Current Cobra qualified beneficiaries should carefully consider, should they drop Cobra to enroll at this Open Enrollment in the Marketplace? Or continue Cobra until the Cobra coverage is exhausted? Or invoke the complex rules above for exception of “determined newly eligible for subsidized coverage?”
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