@bjdickmayhew has your new health insurance kicked in yet? — Colleen (@Col1482) February 2, 2017 I was joking with my sister on Twitter about previous strings of mostly teenage bad judgment and she became eminently practical. Yes, I do have my insurance again. But this illustrates the end of a common use of a one …
Cobra games and one way optionsPost + Comments (29)
COBRA requires the sponsor of an ESI plan to send a letter notifying employees who are losing coverage the option to elect to buy in. The buy-in option extends for 63 days after the loss of coverage or receipt of the letter whichever is later. Coverage is retroactive if premiums are paid in full to bring the account to current.
I rejected COBRA as it is expensive. My former ESI coverage would have cost me $1,200 or more per month to cover just me as my wife and kids had switched over to her ESI coverage on January 1. That is expensive.
Switching over to my wife’s coverage would have cost me $300 above and beyond adding my wife and kids to her coverage as her firm has a high spousal surcharge if the spouse has other coverage available. That option is becoming more common.
I would have qualified for a QHP during open enrollment. In Durham, a basic Bronze/hit by a meteor policy would cost me about $400 for January coverage.
Go uncovered has no out of pocket premium expense but it as the downside of unlimited risk if I get hit by a bolide in a short time frame.
All else being equal if there was no other options, I would have gone on my wife’s coverage for a month and then drop myself from her coverage on February 1st. But there is another option. Cobra is effectively a one way option for the first 63 days. If your healthy up to the 63rd day, you pay nothing. If you’re hit by a meteor, you have your spouse mail in the paperwork and the check and the insurer is on the hook to pay all claims. So the logic is healthy pay zero and get zero back or if unexpectedly sick pay full ESI price but get a lot back. It is a nice option if you know it is there, you have a way of activating the option in case of need and you can afford to come up with all of the owed premium at once. I had a check with the signed paperwork in an envelope clipped to the refrigerator for my wife to process in case I needed insurance.
I ended up being lucky for the month. My biggest medical expense was a box of peppermint tea to clear my sinus during a bout of the sniffles. I ended up paying nothing for insurance and the risk pools all got a little bit weaker as I took advantage of an option to get out for a month to save $300.
People who either know the system or know people who know the system will use completely legal ploys to benefit themselves at the cost of a sligthly sicker general risk pool. It is individually rational but collectively self destructive.