Earlier this week two commenters asked related questions as to how to manage transitions in their healthcare.
any advice with regards to health insurance for someone who will be quitting their job (and losing their health insurance) and then moving out of state a month later?
I’ll second this question, actually. It’s not me yet, but come January it’s probably going to be. (Moving from a state without Medicaid expansion to a state with it, if that matters any).
Chris has the much easier question.
My advice to him or anyone else who is moving from a Rejection state to an Expansion state is to apply for Medicaid as early as possible ahead of time.
If you apply too early, the worst that can happen is they reject you and tell you to apply after you’ve completed your move. If you move into an Expansion state without coverage but start in good faith the application process, and are then approved for Medicaid Expansion coverage, the state will retroactively pay any claims that you incurred while waiting for approval (this may not apply to Arkansas or other private option states).
Texas Kid has a much tougher problem as there are a lot of variables at play. COBRA is a limited extension of benefits that had previously been provided via an employer to an individual. The difference is the individual has to pay the entire premium plus a 2% administrative fee.
So let’s work through scenarios.
If there is a high out of pocket plan, the monthly premium cost will be moderately low. If TxKid is already at or very close to the yearly out of pocket limit and anticipates that s/he’ll need a very expensive procedure, then paying the COBRA premium but no cost sharing could be worthwhile especially as that would imply a fairly valuable set of relationships have already been built.
Losing employer sponsored coverage is a qualifying life event. Texas Kid could go on the Exchange to get a new policy for September through December. The deductibles and out of pocket maximums will reset to zero for the new individual policy. This trade-off can make sense.
Now if there is no anticipated medical need and there have been very few expenses for the year that went against cost sharing, COBRA is expensive and dropping COBRA in favor of an Exchange policy could be justified. It is highly likely that an unsubsidized policy will be available on Exchange that is cheaper than the COBRA policy while providing the same deductible/out of pocket.
That cheapness will come from a combination of a narrower network and lower reimbursement rates. For instance, if I quit tomorrow, I could find similar insurance to my company provided insurance for my family. I would pay roughly sixty percent of the COBRA price. I’m giving up half of my network to do so, and the reimbursement rate for the provider goes from 180% to 225% of Medicare charges to 110% of Medicare charges. Given that my family is pretty healthy, this would be a worthwhile risk for us.
Now if TxKid’s income is low enough to qualify for subsidy on the Exchange, the odds of getting a superior net deal on an Exchange policy (premium plus anticipated out of pocket expenses) for September through December improves as net premium costs will decrease.
COBRA is facing the mongoose of PPACA, and while there are rare exceptions where COBRA is a better deal than an Exchange plan, those cases are rare. These cases will be late in the year with the out of pocket costs already maxed out and highly probable high costs in the immediate future. In those cases, COBRA is a viable choice. In most cases, the lower cost of Exchange plans (even unsubsidized) compensates for resetting the deductible/OOP limits.
Chris
Ahhhhh. Thank you! Yes, this was mainly my question – I’m sure I can apply for Medicaid when I’m there, but the last time I contemplated something like this they said the application would take a month and a half or something (it was a different state), so my main question was, is there a program I can go on to bridge the period while they’re processing the application, establishing residency, and whatnot?
(I’ve done the whole “go a month without health insurance in a transition period, because what’re the odds you’ll get sick in a month, amirite?” Not doing it again).
So, yeah, that answers that – I wasn’t at all aware that Medicaid would cover these things retroactively. Thanks!
CaseyL
Here’s another wrinkle regarding the COBRA issue, explained to me by an insurance sales rep(!):
Most employer-paid insurance policies have a 30-day grace period when switching to COBRA. That is, you can go 30 days without paying the premium and as long as you do pay on the 30th day, you don’t lose coverage for that month. An example: If you have a serious illness or injury on the 15th day after you would have started COBRA coverage, you can file the claim just as if you had paid the premium.
This is good to know if there’s a big disparity between the benefits of your old plan v. what you’d get on the Exchange, and if the injury or illness is really serious. Paying the high COBRA premium could be worth it, if it’s a difference between a 60% and an 80% reimbursement rate.
And, if nothing happens over that 30-day period, then you sign up for a policy on the Exchange.
ArchTeryx
This is exactly what I did, Richard. I was staring down the barrel of a gun aimed square at my gut: A colitis sufferer and J-pouch recipient, I was in a refusenik state (Michigan) and my unemployment was about to run out thanks to Patty Murphy and Rand Paul’s machinations over the budget. So I couldn’t afford COBRA and to me, health coverage is what keeps me alive. Without it, out of control inflammation, sepsis and other nasty stuff would quickly follow.
However, I had an out: My best friend lived in New York and offered me a place to stay. And I took that out to save my own life.
What I did is immediately shift my mail from Michigan to New York, at his address. I had not physically *moved* there yet, but mail addressed to him counted as proof of residency. Once mail started arriving, he mailed it back to me in Michigan, and I scanned it in. Then I opened a Medicaid application with the State of New York.
It was a good thing, too. The residency question was easy to prove. But they got hung up on the fact that I had still been employed six months earlier, and kept demanding that I prove a negative – that I now had no income at all. Proving a negative is a really tough thing to do, so we wrangled over it for the better part of *six months*, and well after I moved. It was a major problem because while doctor’s bills were retroactively paid, drugs paid for out of pocket were NOT retroactively covered and no pharmacy would just hand me my medication on the possibility that I MIGHT get Medicaid. My offered proof – my employment *and* my unemployment termination letters – weren’t good enough. Finally, after going up the chain far enough, I got them to accept the dual termination letters as sufficient proof of income, and I got Medicaid for the rest of the year.
(This year was another multi-month fight with Medicaid because all my income came from self-employment income, but that’s an entirely separate story).
The moral of this story? Apply for Medicaid as far in advance as possible, just like Richard said. Medicaid bureaucracies can be nigh inpenetrable – NY State’s certainly is – but once you’re in, you’re IN for a year. No more proving month to month or even week to week that you’re under the often insanely low income limits. The ACA put a stop to all that nonsense.
Richard Mayhew
@CaseyL: Actually, the option value of COBRA is even higher.
https://balloon-juice.com/2013/12/02/the-cobra-option/
61 days at least to choose COBRA and 45 days after choosing to pay for Month #1.
This is basically a massive free option for at least 2 months and if you don’t mind debt collection calls, a 3 or 4 month option depending on how fast the HR department sent you a notification letter.
At day 59 after termination, if you have had a major medical expense, you elect COBRA and send in the check for Month 1 and Month 2 retro-coverage.
If not, you just had two free months of insurance as an option.
ArchTeryx
Ooops. Somehow when I edited the comment it got marked for moderation – probably because I use the word “ph*rmacy” in it.
blackcatsrule
Thank you Richard and commenters for this post…within the next year I am moving from my non-expansion red state to NYS…can I just confirm that I can apply for Medicaid solely on the basis of the fact that I will be unemployed when I move back?
Richard Mayhew
@blackcatsrule: I am not sure. That is a state level regulation and I don’t know the ins and outs of New York state regulation.
Might be worthwhile to e-mail ArchTeryx as s/he seems to have picked up some knowledge on how to navigate New York state Medicaid regs.
Applying early and getting rejected should not hurt future re-applications.
ArchTeryx
@blackcatsrule: Definitely email me, blackcatsrule. I can cite chapter and verse on navigating that cursed system. Short answer: Yes, you can, but you’ll be asked to prove you have no income. That proof will involve either an unemployment termination letter or an unemployment rejection letter, and your termination letter from your previous employer, and it’ll involve a fair amount hassle. They are set up, IMHO, to make as many people as possible get frustrated and go away. However, if you stick with it and keep calling them and hitting them, eventually you’ll get through, and once you’re in, you’re in for 12 calendar months before they’ll ask you to renew and go through it all again.
blackcatsrule
@ArchTeryx: Thank you…I used to live in NY before I moved away and well remember how frustrating things were. And as you said, how can you prove a negative? Your experience does give me a clearer picture of what is ahead; fortunately I still have some time to start the ball rolling.
blackcatsrule
@Richard Mayhew: Richard, thank you for your reply as well as for all your posts on this unnecessarily complex system.