Unusual situation brought about by interaction between COBRA and subsidized ACA polciy - any insights?

[D1984]

I was laid off a little over month ago (it's a long story but nothing to do with my job performance or anything that I did or did not do) and have been offered and accepted employer-paid COBRA for the next five months (i.e. at a $0 cost to myself because my now-former employer pays all the premiums). Since the COBRA coverage will not last beyond that I am also thinking about buying a Healthcare.gov Marketplace plan; said plan will cost me maybe $25 a month or so (I will be heavily subsidized for the 2021 plan year, see below for why). I will be looking for another job as soon as COVID subsides when the vaccines come out; right now I have plenty of savings because (assuming worst case scenario in that I don't find a job until late next year or that the employer doesn't offer coverage....if I find one early in the year and it offers health coverage the whole point is moot anyway).

I can basically create just enough taxable income at will to qualify for the maximum amount of ACA subsidies because I have over $100K--all of it in pre-tax contributions--in a 401k from a job two employers ago; they allow Roth conversions of any amount at $500 and above at a time (and if they didn't I'd just roll the money over to a solo 401k and do the Roth conversions from it). As such, even if I wasn't employed at all that year I could still create just enough income to kick me a few dozen dollars above 100% FPL and get me out of the "Medicaid gap" (my state didn't expand Medicaid); I also will have a little bit of dividend income and interest income and can realize some capital gains (nowhere near enough to put me over the 100% FPL by itself, though.....the lion's share of my assets with capital gains are sheltered in 401Ks and Roth IRAs).

If I currently have COBRA coverage lasting until late April and I go ahead and apply for subsidized ACA coverage and am accepted for coverage:

1. What will happen when I file my 2021 taxes in early 2022? Will the IRS get a copy of the 1095-C from my employer and/or will my employer even send me a 1095-C for the 2021 year since I was no longer an actual employee as of late October 2020?

2. I know that you have to pay ACA premiums subsidies (APTCs) back if you underestimate your income--although if you are under 400% FPL the payback is on an income-based sliding scale so you won't have to pay back nearly the whole amount of the APTCs--but will they make you pay the APTCs back if you had COBRA for a few months while you also had a subsidized ACA Healthcare.gov marketplace plan? I am concerned that they might do so under the guise that if you were on COBRA you had an (to use the legal terminology in the ACA) "Employer-Provided Health Insurance Offer" and took it and thus were ineligible for subsidies?

3. If they DO make someone in this situation pay the APTCs back, will it be for the whole 2021 year or will it just be for the not-quite-four months that said person had COBRA

4. In a situation as in #3 above......will the repayment amount be on an income-based sliding scale like it is for when you underestimate your income and thus get too much subsidy or will I have to repay the full $670+ a month APTC?

This is all very frustrating and red-tapey to me. If you are wondering why I don't just take the COBRA until the end of April and then switch to a subsidized Healthcare.gov plan the issue is that while the government via Healthcare.gov says you can do this (at https://www.healthcare.gov/unemployed/cobra-coverage/ ) there is actually nothing in the CFR or USC (including nothing in the PPACA itself) specifically allowing and/or requiring them to do this. There are no enabling regulations from Treasury or from HHS either; and to top it off there is no IRS guidance/TAM/PLR/regulation (this is important because the IRS is the agency that actually handles the subsidies since technically the subsidies are refundable tax credits albeit ones paid directly to the insurer instead of to the taxpayer his or her self) that deals with allowing subsidies for people who try to enroll after their 60 day Special Enrollment Period has expired (so even if I was allowed to enroll after my employer-subsidized COBRA ended they still could technically be within their legal rights to say I was entitled to no subsidy at all).

If you look at https://www.lumity.com/unintended-conse ... -subsidies (from a benefits consulting company) and https://www.bsk.com/news-events-videos/ ... bsidy-ends (from a white-collar corporate law firm that handles benefits law, labor law, ERISA law, and healthcare law) they seem to make it clear that--despite what Healthcare.gov says--there is no actual legal requirement for the government to let me enroll in an ACA Marketplace plan once my employer-subsidized COBRA expires and I am left with the choice of either paying the full COBRA premium myself (which would be $600+ a month) or being stuck without health coverage until open enrollment for 2021 which would let me buy coverage for the plan year starting in 2022.

When I had HR at my former employer contact the corporate HR and legal team they emailed back and sent the Healthcare.gov link I mentioned above and said that I should have no problem buying a Marketplace plan once my employer COBRA subsidy ends; I even emailed HR the link to the law firm and benefits consulting firm websites I mentioned above in order to send that to corporate; corporate's benefits and legal team more or less said (not in so many words but this was the gist of it) that "well, what we are telling you is right and what those guys are saying is wrong". I talked to someone at Healthcare.gov's toll-free customer service line and the person I talked to also said that I would be eligible to enroll in a Marketplace plan (with a subsidy) once my employer-subsidized COBRA ended....but he wouldn't email that or put it in writing or explain to me where in the PPACA law the provision was actually allowing the government to let me do so.

So what do y'all think I should do? Go ahead and enroll in a Healthcare.gov marketplace plan with the subsidies (this plan would kick in on 1-1-2021 since I know I will keep my COBRA until at least then) and risk having to pay back the APTC subsidies and/or risk prosecution for fraud (if having COBRA coverage counts as an "offer of Employer Provided Coverage" and I checked "no" in the box on the online application where they asked if I had such an offer or not) or wait until April and risk trying to enroll in said plan then and risk not having health insurance for over half the year if it turns out I am not allowed to enroll at that point?

[Mountaineer]

D1984,
First of all, I'm sorry you got laid off. Secondly, you sound like you are considering quite a lot of facts and have a good handle on the options. Guessing what the situation will be with a new government in place is indeed a crap shoot, especially given the uncertainties you discuss. I'm sure you have considered some other key info you did not present: your health and probability of insurance need if you lose healthcare insurance for a while, and if the worst happens, could you fund the necessary medical treatment. Given your scenario, I'd personally enroll sooner rather than later; sounds like you are in a position to pay back if necessary. Best wishes with whatever you decide.

... Mountaineer

[Xan]

What a mess. Are you eligible for one of the healthcare cost-sharing ministries?

[D1984]

D1984,
First of all, I'm sorry you got laid off. Secondly, you sound like you are considering quite a lot of facts and have a good handle on the options. Guessing what the situation will be with a new government in place is indeed a crap shoot, especially given the uncertainties you discuss. I'm sure you have considered some other key info you did not present: your health and probability of insurance need if you lose healthcare insurance for a while, and if the worst happens, could you fund the necessary medical treatment. Given your scenario, I'd personally enroll sooner rather than later; sounds like you are in a position to pay back if necessary. Best wishes with whatever you decide.

... Mountaineer

My health is generally not awful but I do have some of what would be considered pre-existing conditions; please see my reply to Xan.

If I was a deadbeat who had no assets, no wealth, no owned real estate, no chance at any future job beyond minimum wage (which would mean I would be too poor for any medical provider to legally garnish my wages), and had bad credit (i.e. no credit to ruin because it already sucked) I would likely just buy the ACA policy and then if they said I couldn't because I was on COBRA and thus they rescinded the policy I'd probably just cross my fingers and hope I didn't get sick or have any major medical issues until open enrollment next year. However, the above does not describe me at all; I own a home (still have a mortgage on it but probably have about 85 or 90K equity above the mortgage), have $110K plus in taxable accounts and bank accounts, have close to $100K spread over various Roth IRAs (which in my state do not have the protection against creditor liens and asset protection that regular pre-tax IRAs enjoy....they do have the same protection in bankruptcy but that doesn't wipe out any pre-bankruptcy liens that have been placed on them), and my lowest credit score is in the mid 820s. Simply "going naked" with no coverage and hoping for the best is too risky of an option for me.

I don't even mind having a $4K or $5K deductible (although obviously I'd prefer a much lower one) but I need something that at means I won't face absolute financial ruin if I get cancer, have a heart attack, stroke, have a major accident, etc.

[D1984]

What a mess. Are you eligible for one of the healthcare cost-sharing ministries?

I don't think so. One, I'm not going to lie and say I'm religious when I'm not. Two, while I am generally pretty healthy and avoid engaging in high risk behaviors (I am 36 years old, male, 169 or 170 lbs at 6 ft 2 in height, I don't drink, don't use drugs, don't smoke, don't eat a mostly junk food or fast food Standard American Diet, I haven't had any HFCS containing carbonated drinks since 2017, don't sleep around with a bunch of partners or do anything else that would expose me to STDs, haven't had a speeding ticket since 2003, don't participate in risky activities like skydiving, rock climbing, being a private pilot, etc) I do have:

1. Familial hemochromatosis (not currently taking any meds for this...just have to be bled every few months or give blood)

2. Mild hypertension (pretty well controlled on 5 mg generic Lisinopril)

3. While my actual LDL/HDL ratio was quite good enough that my doctor didn't even (after having it tested this year) see any need to re-test it for another four or five years the total overall cholesterol number was a bit over what the blood test said was a "normal" range.

4. I am neither diabetic nor quite pre-diabetic but my FBG hovers at around 95-99 typically (just short of pre-diabetic) and diabetes does run in my mom's side of the family both through her dad and her mom (my granddad and grandma) and my mother herself was diagnosed with Type II diabetes at 56 despite not eating a junky diet and not being overweight at all.

5. I have Asperger's syndrome (I was diagnosed with it in the early 2000s....I guess they would call it "autistic spectrum disorder" nowadays)

6. I have pre-existing knee conditions (damage and erosion of cartilage behind the kneecap...this was due to old injuries almost sixteen years ago...it's not bad enough that I would need a knee replacement for the next decade or two but it does mean that I won't be doing any squats or running any marathons) and a 12% permanent partial disability in my right shoulder due to a workplace injury at a former employer (several jobs ago) back in 2005.

The above alone would likely disqualify me for any healthcare cost-sharing ministries even if I was willing to lie though my teeth about being religious.

Even if it wouldn't be disqualified due to all of the above I do want actual insurance; I kind of worry that HCSMs have no actual reserves and no enforceable legal obligation to pay like true insurance companies do so that would also be a reason I'd avoid being "covered" by a HCSM. I want coverage that I 100% know will be there if and when I need it.

[vnatale]

What a mess. Are you eligible for one of the healthcare cost-sharing ministries?

I don't think so. One, I'm not going to lie and say I'm religious when I'm not. Two, while I am generally pretty healthy and avoid engaging in high risk behaviors (I am 36 years old, male, 169 or 170 lbs at 6 ft 2 in height, I don't drink, don't use drugs, don't smoke, don't eat a mostly junk food or fast food Standard American Diet, I haven't had any HFCS containing carbonated drinks since 2017, don't sleep around with a bunch of partners or do anything else that would expose me to STDs, haven't had a speeding ticket since 2003, don't participate in risky activities like skydiving, rock climbing, being a private pilot, etc) I do have:

1. Familial hemochromatosis (not currently taking any meds for this...just have to be bled every few months or give blood)

2. Mild hypertension (pretty well controlled on 5 mg generic Lisinopril)

3. While my actual LDL/HDL ratio was quite good enough that my doctor didn't even (after having it tested this year) see any need to re-test it for another four or five years the total overall cholesterol number was a bit over what the blood test said was a "normal" range.

4. I am neither diabetic nor quite pre-diabetic but my FBG hovers at around 95-99 typically (just short of pre-diabetic) and diabetes does run in my mom's side of the family both through her dad and her mom (my granddad and grandma) and my mother herself was diagnosed with Type II diabetes at 56 despite not eating a junky diet and not being overweight at all.

5. I have Asperger's syndrome (I was diagnosed with it in the early 2000s....I guess they would call it "autistic spectrum disorder" nowadays)

6. I have pre-existing knee conditions (damage and erosion of cartilage behind the kneecap...this was due to old injuries almost sixteen years ago...it's not bad enough that I would need a knee replacement for the next decade or two but it does mean that I won't be doing any squats or running any marathons) and a 12% permanent partial disability in my right shoulder due to a workplace injury at a former employer (several jobs ago) back in 2005.

The above alone would likely disqualify me for any healthcare cost-sharing ministries even if I was willing to lie though my teeth about being religious.

Even if it wouldn't be disqualified due to all of the above I do want actual insurance; I kind of worry that HCSMs have no actual reserves and no enforceable legal obligation to pay like true insurance companies do so that would also be a reason I'd avoid being "covered" by a HCSM. I want coverage that I 100% know will be there if and when I need it.

I was in one for about 15 (or more years).

When I first joined them I had a pre-existing something which I still have.

I'm forgetting whether it was going to disqualify me from joining or whether they were not going to cover anything related to it? I'm strongly leaning towards the latter. I do remember my doctor writing a strong letter saying that I'd had this for decades, was otherwise an extremely healthy person, and, most likely, would never need any treatment for this condition.

I think that bought me getting covered for it IF I ever had a need for treatment of it. I think if they had not accepted what he had to say that it would have been permanently not covered or not covered for a certain time period, e.g., a year. It was nearly 25 years ago so not quite remembering all the details.

Vinny

[vnatale]

If it were me, I'd do this:

Not apply for ACA coverage now. Wait until the end of my COBRA and re-evaluate then. This gives you maximum option value.

Because:

1) You may have a job in May which provides health insurance and negates the need for your ACA policy. And if you have a job in May, you will likely be above the subsidy threshold and will have to repay the ACA for those first 4 months of the year where you didn't even need the coverage.

2) You may decide, screw it, you can go without insurance until you get a new job. If you come down with any chronic illness between now and May then just pay for COBRA if you can't get ACA to allow enrollment mid-year due to a life-changing event (losing employer sponsored coverage). You sound relatively healthy and as long as that doesn't change between now and May, you may decide, screw it.

If you decide not to get ACA or cannot get ACA and decide not to pay for COBRA beyond May, then I suggest adding a $10k personal injury payments addon to your car insurance since the two major causes of problems for people in your age range are suicide and accidents. So you'll have the first $10k of that covered at least. For the car accident, not the suicides.

Some people say that they learn something new every day. You just taught me my new thing for today! Multiple suicides!

Vinny

[D1984]

If it were me, I'd do this:

Not apply for ACA coverage now. Wait until the end of my COBRA and re-evaluate then. This gives you maximum option value.

Because:

1) You may have a job in May which provides health insurance and negates the need for your ACA policy. And if you have a job in May, you will likely be above the subsidy threshold and will have to repay the ACA for those first 4 months of the year where you didn't even need the coverage.

2) You may decide, screw it, you can go without insurance until you get a new job. If you come down with any chronic illness between now and May then just pay for COBRA if you can't get ACA to allow enrollment mid-year due to a life-changing event (losing employer sponsored coverage). You sound relatively healthy and as long as that doesn't change between now and May, you may decide, screw it.

If you decide not to get ACA or cannot get ACA and decide not to pay for COBRA beyond May, then I suggest adding a $10k personal injury payments addon to your car insurance since the two major causes of problems for people in your age range are suicide and accidents. So you'll have the first $10k of that covered at least. For the car accident, not the suicides.

Hi Tom,

Thanks for the advice on the personal injury addon; I actually already have $25K personal injury protection on my current auto policy but I shall look at adding $10K more on top of that.

I wish/hope I'd have a job by May; it usually takes me a while to find a job (or rather to find one that will hire me); the last time I was looking for a job (almost 15 years ago) I gave up counting after forty-five rejections (either no reply to my resume, a reply saying thank you for applying but unfortunately we don't feel you are the best candidate--and/or they already hired somebody else, or being interviewed and then not getting the job after the interview/s). Oh, and this includes jobs like Mickey D's, Burger King, janitorial positions, retail, etc as well as non-entry level jobs. Probably it has something to do with me being an Aspie and seeming "weird" to your average neurotypical; I also am bad at social interaction in general, try to avoid it whenever possible, avoid talking to people unless I absolutely have too, and given the high anxiety I have around social interaction at all I suspect I may have social anxiety (although I have never been actually diagnosed with that). I'm not rude, I don't come in to the interviews without bathing and shaving (and I know enough to wear decent office attire or dress clothes and not walk into an interview wearing a ratty t-shirt and blue jeans with holes in them), I don't apply for positions for which I clearly am not qualified for, and I don't insult/curse/harass/deliberately offend the interviewer....but most companies don't want to take a chance on someone like me when they have plenty of "normal" candidates to choose from. I've never been fired for cause, I've never failed a drug test, and all my performance reviews at any of my (so far) four jobs have all been pretty good....I just suspect that given a choice many (most) employers would--everything else being equal--prefer to hire the neurotypical than the guy they see as slightly weird or "off" in some sense.

Also, even if the above were not the case the reason I was laid off was because I was (according to my most recent former employer's definition of disability which essentially meant that if I couldn't do 100% of the tasks at my former job then I was too disabled to work...they didn't do light duty....it was either all or nothing) disabled and after a certain period of time on short-term and long-term disability and FMLA they let you go. The fact that I was let go for this reason is also why my employer is paying my COBRA for a few months. As my employer's LTD insurer made me apply for SSDI I am technically not even allowed to look for work (if I do I would--according to what the disability insurer told me--forfeit my current month's long-term disability pay and also have to back pay up to 60 days of already received payments) according to the insurer until and if the SSA rejects me and says that while I may be disabled according to my employer's "own occupation" definition I can at least do some kinds of jobs in the economy and thus am substantially capable of gainful employment and therefore not disabled by the disability insurer's "any occupation" definition that pretty much follows what SSA says about being capable of doing any job at all. On the advice of my SSDI attorney I shall not speculate openly to anyone not connected with the case as to whether I would be disabled by SSA's definition (i.e. whether I am capable of doing office work, computer work, clerical work, etc even though most manual labor, assembly line, factory, fast food, or retail jobs would probably be out) and whether or not I would be rejected for SSDI or not but until March or April I won't know anything about that anyway because that's when SSA says they will make the initial determination. FWIW I would rather work than get SSDI because for one, I am bored as hell sitting at home (although even if I wasn't in this situation with the disability insurer I would still probably wait until COVID clears once we have a vaccine before I started applying for jobs that had me interacting with people who might carry COVID) and two, my SSDI would be about $1790 a month and I figure if I can get a decent job I can easily make more than that after a few years at said job.

[Xan]

D1984,

Understood that the health-sharing ministries won't work for you. On pre-existing conditions, they don't turn you down, at least CHM (the one with which I'm most familiar) doesn't. They start out not paying for anything related to that condition, and then gradually over a period of 3 years they phase in how much they'll pay towards it. After that it's not considered pre-existing anymore. (This is all from memory; anybody needing all the details should go look it up!)

So it's actually a pretty generous pre-existing condition policy.

[vnatale]

D1984,

Understood that the health-sharing ministries won't work for you. On pre-existing conditions, they don't turn you down, at least CHM (the one with which I'm most familiar) doesn't. They start out not paying for anything related to that condition, and then gradually over a period of 3 years they phase in how much they'll pay towards it. After that it's not considered pre-existing anymore. (This is all from memory; anybody needing all the details should go look it up!)

So it's actually a pretty generous pre-existing condition policy.

That seems fairly familiar with what I was facing if my doctor's letter had not convinced them to consider it a pre-existing condition. But again, it was 25 years ago when I started so memory is now fuzzy regarding all the details.

Vinny

[Tyler]

If I currently have COBRA coverage lasting until late April and I go ahead and apply for subsidized ACA coverage and am accepted for coverage:

1. What will happen when I file my 2021 taxes in early 2022? Will the IRS get a copy of the 1095-C from my employer and/or will my employer even send me a 1095-C for the 2021 year since I was no longer an actual employee as of late October 2020?

2. I know that you have to pay ACA premiums subsidies (APTCs) back if you underestimate your income--although if you are under 400% FPL the payback is on an income-based sliding scale so you won't have to pay back nearly the whole amount of the APTCs--but will they make you pay the APTCs back if you had COBRA for a few months while you also had a subsidized ACA Healthcare.gov marketplace plan? I am concerned that they might do so under the guise that if you were on COBRA you had an (to use the legal terminology in the ACA) "Employer-Provided Health Insurance Offer" and took it and thus were ineligible for subsidies?

3. If they DO make someone in this situation pay the APTCs back, will it be for the whole 2021 year or will it just be for the not-quite-four months that said person had COBRA

4. In a situation as in #3 above......will the repayment amount be on an income-based sliding scale like it is for when you underestimate your income and thus get too much subsidy or will I have to repay the full $670+ a month APTC?

...

So what do y'all think I should do? Go ahead and enroll in a Healthcare.gov marketplace plan with the subsidies (this plan would kick in on 1-1-2021 since I know I will keep my COBRA until at least then) and risk having to pay back the APTC subsidies and/or risk prosecution for fraud (if having COBRA coverage counts as an "offer of Employer Provided Coverage" and I checked "no" in the box on the online application where they asked if I had such an offer or not) or wait until April and risk trying to enroll in said plan then and risk not having health insurance for over half the year if it turns out I am not allowed to enroll at that point?

Sorry about the layoff. That's never fun.

I've used the ACA pretty regularly over the last few years and have been pretty happy with it. Although I've never been in your situation because I always turned down COBRA, here's what I know.

1. Unless it has changed in the last few years, I believe the 1095-C is something you fill out yourself. I distinctly remember having to look up info to fill it out on Turbotax.

2. You can't get ACA coverage if you also use COBRA. It's one or the other. Although when you lose COBRA coverage, that qualifies as a life change that lets you have a special enrollment period. I understand you're not sure that's true, but I'll add my voice to the many others who believe it is.

3. Subsidies are reconciled on an annual basis when you do your taxes. So individual months are irrelevant for final calculation purposes. If you have minimum income for 11 months (qualifying you for maximum subsidies) and make $100k in December, you lose all subsidies for the entire year and will have to pay them back.

4. Not sure on the repayment rules. I know there's a system that keeps you from repaying too much at once. Personally, I err the other way and take no subsidies up-front while getting a larger tax refund in the future. But everyone's situation is different.

So in your situation, it sounds like you have 2 options:

0. Accept COBRA and sign up for simultaneous ACA coverage. I don't think this is a legit option, as it's explicitly against the rules. Even if you slip it through up-front, it will probably come back to bite you. In fact, I just renewed yesterday and there was a signature box where you have to accept that they can cancel your coverage at any time if they find out you're covered elsewhere.

1. Accept COBRA and sign up for the ACA when your COBRA expires. To my knowledge, that should work fine.

2. Decline COBRA (if you still can) and sign up for ACA coverage. Based on your note about gaming your income, it will be super cheap and maybe even a better deal than COBRA because you may also get a greatly reduced deductible. The downside is that you'll need to quickly update your income in their system in the event you get a new job in order to make sure you don't have a big tax bill later.

I hope that helps. And good luck with the job hunting!

[doodle]

I haven't read through all the details pertaining to your situation but welcome the the complex world of american health coverage. I was thrust into this last year when I left my career. I have since changed my health care 4....no 5 times this year...each time I moved to a different state and then twice for different employers. Will change a sixth time when I leave this employer and then a seventh when I move to next state.....yeah, we need a national healthcare pool/system. Hope you figure it out. I'm curious how you navigate this and how it affects your political beliefs regarding this topic moving forward.

[doodle]

I haven't read through all the details pertaining to your situation but welcome the the complex world of american health coverage. I was thrust into this last year when I left my career. I have since changed my health care 4....no 5 times this year...each time I moved to a different state and then twice for different employers. Will change a sixth time when I leave this employer and then a seventh when I move to next state.....yeah, we need a national healthcare pool/system. Hope you figure it out. I'm curious how you navigate this and how it affects your political beliefs regarding this topic moving forward.

Agreed. We also need national gun concealed carry laws for the same reason. Rather than every state coming up with their own doofy laws and requirements. And some states refusing to give one at all, unless you are wealthy and pay off the right politician or policeman. As a high ranking Apple employee got in trouble for recently.

It's a whole lot better with guns than healthcare though. My states concealed permit has reciprocity with almost all states except a few...

Why don't large health insurance companies span state lines?

[D1984]

If I currently have COBRA coverage lasting until late April and I go ahead and apply for subsidized ACA coverage and am accepted for coverage:

1. What will happen when I file my 2021 taxes in early 2022? Will the IRS get a copy of the 1095-C from my employer and/or will my employer even send me a 1095-C for the 2021 year since I was no longer an actual employee as of late October 2020?

2. I know that you have to pay ACA premiums subsidies (APTCs) back if you underestimate your income--although if you are under 400% FPL the payback is on an income-based sliding scale so you won't have to pay back nearly the whole amount of the APTCs--but will they make you pay the APTCs back if you had COBRA for a few months while you also had a subsidized ACA Healthcare.gov marketplace plan? I am concerned that they might do so under the guise that if you were on COBRA you had an (to use the legal terminology in the ACA) "Employer-Provided Health Insurance Offer" and took it and thus were ineligible for subsidies?

3. If they DO make someone in this situation pay the APTCs back, will it be for the whole 2021 year or will it just be for the not-quite-four months that said person had COBRA

4. In a situation as in #3 above......will the repayment amount be on an income-based sliding scale like it is for when you underestimate your income and thus get too much subsidy or will I have to repay the full $670+ a month APTC?

...

So what do y'all think I should do? Go ahead and enroll in a Healthcare.gov marketplace plan with the subsidies (this plan would kick in on 1-1-2021 since I know I will keep my COBRA until at least then) and risk having to pay back the APTC subsidies and/or risk prosecution for fraud (if having COBRA coverage counts as an "offer of Employer Provided Coverage" and I checked "no" in the box on the online application where they asked if I had such an offer or not) or wait until April and risk trying to enroll in said plan then and risk not having health insurance for over half the year if it turns out I am not allowed to enroll at that point?

Sorry about the layoff. That's never fun.

I've used the ACA pretty regularly over the last few years and have been pretty happy with it. Although I've never been in your situation because I always turned down COBRA, here's what I know.

1. Unless it has changed in the last few years, I believe the 1095-C is something you fill out yourself. I distinctly remember having to look up info to fill it out on Turbotax.

2. You can't get ACA coverage if you also use COBRA. It's one or the other. Although when you lose COBRA coverage, that qualifies as a life change that lets you have a special enrollment period. I understand you're not sure that's true, but I'll add my voice to the many others who believe it is.

3. Subsidies are reconciled on an annual basis when you do your taxes. So individual months are irrelevant for final calculation purposes. If you have minimum income for 11 months (qualifying you for maximum subsidies) and make $100k in December, you lose all subsidies for the entire year and will have to pay them back.

4. Not sure on the repayment rules. I know there's a system that keeps you from repaying too much at once. Personally, I err the other way and take no subsidies up-front while getting a larger tax refund in the future. But everyone's situation is different.

So in your situation, it sounds like you have 2 options:

0. Accept COBRA and sign up for simultaneous ACA coverage. I don't think this is a legit option, as it's explicitly against the rules. Even if you slip it through up-front, it will probably come back to bite you. In fact, I just renewed yesterday and there was a signature box where you have to accept that they can cancel your coverage at any time if they find out you're covered elsewhere.

1. Accept COBRA and sign up for the ACA when your COBRA expires. To my knowledge, that should work fine.

2. Decline COBRA (if you still can) and sign up for ACA coverage. Based on your note about gaming your income, it will be super cheap and maybe even a better deal than COBRA because you may also get a greatly reduced deductible. The downside is that you'll need to quickly update your income in their system in the event you get a new job in order to make sure you don't have a big tax bill later.

I hope that helps. And good luck with the job hunting!

Regarding losing COBRA: I actually 100% agree with you that it is factually true as a matter of the letter of the law that when you lose COBRA that qualifies as a life change event and thus qualifies you for a Special Enrollment Period. This is only true, however, if by "losing COBRA" you mean having your 18 months of COBRA entitlement run out. My problem/situation is not the 18 months of COBRA running out; it is the employer subsidy running out...that will happen well before the 18 month COBRA period ends (18 months of COBRA would end for me roughly by late May 2022); the employer subsidy will end by spring 2021. My concern is that there is no explicit authorization in the ACA that says that they HAVE to give you a Special Enrollment period once your employer subsidy runs out. As such, I am left choosing between:

A. Applying for subsidized ACA coverage (presumably to start on 1-1-21....In such a case I will call my employer by next week or so and tell them to please cancel my employer-subsidized COBRA as of 11:59:59 PM on 12-31-20), or,

B. Staying with COBRA, taking the employer subsidy that makes it free until the coming spring, and then hoping that Healthcare.gov will grant me a SEP and if not I'll be stuck paying for COBRA out of pocket until 12-31-21 at which case I can get the subsidized ACA policy for the 2022 plan year.

The choice should seem like a no-brainer; COBRA is over $600 per month once unsubsidized and carries a $600 deductible and 25/75 coinsurance (I pay 25% and the insurer pays 75%) after that until max OOP of $4,000 while the ACA policy has a deductible of $150 and a max OOP of $900 or so. Even considering that the subsidized ACA policy costs a bit over $20 a month while the COBRA is free for around the next roughly 4.5 months or so this would still be a laughingly easy decision (take the AC policy, ya idjit!) except for two huge caveats:

The first is that what if Healthcare.gov refuses to believe I will only make $13K next year and tries to base my policy price on this year's income or 2019's income? If that's the case then I will get either almost no premium subsidy (if based on 2019 income) or only enough premium subsidy to reduce the same Silver plan (the one that if I make $13K a year i can get for roughly $20 a month) to around $178 a month instead of $20 a month. This is a moot point of sorts, though, because if I really DO only make $13K next year then I can get back the cost of the APTCs (the subsidies I should've gotten that would've had me pay $20 a month instead of almost $200) when I file my taxes next year....and having to wait a year to get the money is no big deal to me. The actual big issue here is that when I file my taxes in 2022 for next year (for 2021) I CANNOT get back what would've been the (considerable) financial benefit of the CSR subsidies. If I only make $13K a year the CSR subsidies reduce my deductible and max OOP enough that the policy is actually a very good one; without them it's kind of a barebones catastrophic only policy which (while better than nothing) is really not any better than COBRA should I actually ever need to use the policy for anything major illness or injury-wise (COBRA would have a yearly premium cost of $4800 for May-Dec and a max OOP of $4000 for a worst case yearly cost of $8800; the ACA policy--assuming that I did get all the APTC subsidies back on my taxes in April 2022--would have a yearly premium cost from Jan-Dec of $240 and a max OOP without CSR subsidies of $8500 which comes out to a yearly total cost of $8740). So if they won't accept upfront when I apply (rather than me waiting to claim back the APTC subsidies when I file my 2021 taxes in 2022) that I will be making only $13K a year then the ACA policy isn't much of a better value than COBRA if I actually have any major medical costs that are enough to max out the max OOP. Of course, assuming I have no major medical costs or even assuming I have, say, $1K or $2K costs in a year then yes, the ACA policy would still be a better deal even without CSR subsidies.

The second caveat (and this is the biggie) is the upcoming Supreme Court decision in the California v. Texas case in May or June of 2021. The whole premise behind the case is utterly ridiculous (somehow a mandate of $0 is more coercive than one that actually costs the person some money? GMAFB....and even if one accepts the premise about said zero dollar mandate being more coercive and thus giving the person standing to sue, the clear proper thing to do would be just to sever the mandate from the rest of the law and leave the rest of the ACA intact) but if the SC agrees that:

1. A zero dollar mandate is coercive and thus gives standing,

2. That a mandate with a penalty of $0 is unconstitutional because the only justification making the ACA insurance mandate Constitutional to begin with was that it was a tax that raised revenue and the Constitution is clear that Congress has the power to tax and to regulate that which it taxes,

3. That having found the $0 mandate a violation of the Constitution, the whole ACA must therefore be found to be inextricably and unseverably linked to the mandate and thus the whole law must fall

Then as soon as 30 days after the SC decision I could (in the case of having chosen to cancel my COBRA and instead go with an ACA policy) be left with no insurance and (as a cherry on top of this shit sundae) not be able to claim back any of the cost of the premiums--i.e. the money I paid in premiums that I should've got in APTC subsidies instead since my income was low enough....this is assuming I do what you do and tell Healthcare.gov I have a high enough income not to qualify for subsidies and then if my income was low enough I get it back next year at tax time--when I file my taxes next year (because the ACA itself was what put the premium subsidies in place and if the whole ACA law is struck down then the premium subsidies go bye-bye as well).

So you see why I'm kind of in a pickle. I run the risk of being damned if I do, damned if I don't....I'm forced to try and guess what the courts will do and then base my actions off that just to determine if I get to have health insurance next year or not....something that every other civilized country guarantees as a matter of right just for being a citizen.

F**k do I ever hate the healthcare financing system in this country!

[D1984]

I haven't read through all the details pertaining to your situation but welcome the the complex world of american health coverage. I was thrust into this last year when I left my career. I have since changed my health care 4....no 5 times this year...each time I moved to a different state and then twice for different employers. Will change a sixth time when I leave this employer and then a seventh when I move to next state.....yeah, we need a national healthcare pool/system. Hope you figure it out. I'm curious how you navigate this and how it affects your political beliefs regarding this topic moving forward.

Doesn't really change them much. I was always (or at least since the late 1990s/early 2000s when I started getting old enough to really care much about politics) in favor of a single-payer Improved Medicare for All before and this situation has certainly done nothing to change my mind!

[Tyler]

The first is that what if Healthcare.gov refuses to believe I will only make $13K next year and tries to base my policy price on this year's income or 2019's income? If that's the case then I will get either almost no premium subsidy (if based on 2019 income) or only enough premium subsidy to reduce the same Silver plan (the one that if I make $13K a year i can get for roughly $20 a month) to around $178 a month instead of $20 a month. This is a moot point of sorts, though, because if I really DO only make $13K next year then I can get back the cost of the APTCs (the subsidies I should've gotten that would've had me pay $20 a month instead of almost $200) when I file my taxes next year....and having to wait a year to get the money is no big deal to me. The actual big issue here is that when I file my taxes in 2022 for next year (for 2021) I CANNOT get back what would've been the (considerable) financial benefit of the CSR subsidies.

I can't help you with the politics of the pending court case, but I do have first-hand experience with income verification.

When I first signed up several years ago, I was coming off of a high-paying job and applying for full subsidies (including cost sharing) just like you are. The way it works is that they first compare your stated income to the last tax return they have on file. If your new income is substantially lower (as it is in your case), then they generally approve the application with the extra caveat that you have to provide additional documentation to support your claim of reduced income. A termination letter is sufficient to show loss of work income. A brokerage statement can prove dividend and interest income. The hard part will be proving roth conversion income (if you're depending on that to get over the minimum), if you haven't recently done it to provide documentation. In my experience they're very literal about interpreting what you provide (they corrected my rounded number in the application to the precise one from the documents I provided), so if you're able to do a conversion before you apply that might make it easier to justify.

Good luck. It's certainly a pain. But once you're set up it's not too bad.

[doodle]

Took a cursory glance at this but haven't had time to delve further . Anyone have any experience with these options? Seems like a decent alternative...not sure how the catastrophic Illness scenario plays out though...

https://www.mrmoneymustache.com/2020/ ... ary-care/