COBRA or Affordable Care Act Marketplace Coverage

With the Affordable Care Act mandated health insurance exchange marketplaces there have been many questions about how this will affect COBRA. Some of the wording is vague and until challenged it will remain so. The following is what we understand the law to say. The primary question is when can a COBRA participant change from COBRA coverage through their former employer to a marketplace plan? The marketplace will have an open enrollment period from October 1, 2013 through March 31, 2014 for the first year. After the first year the ongoing open enrollment period will be from October 15 through December 7, the same as the Medicare part D open enrollment period. To enroll in a marketplace plan outside of the open enrollment period, the individual must experience a “special enrollment event”. The rules are similar to the HIPAA special enrollment rules for employer group health plans. The rules for the marketplace special enrollment are: (#1 and #7 pertaining to COBRA issues)

1. Losing other health coverage
2. Adding a dependent through birth; adoption or placement for adoption; marriage
3. New citizenship or lawfully nationally present status
4. Unintentionally or inadvertently failing to enroll due to an error on the part of the marketplace.
5. Changing residence so that the individual gains access to a new marketplace option.
6. If the marketplace is proven to have violated a material provision of its contract in relation to the enrollee (this would permit a covered individual to change plans within the marketplace).
7. Being newly eligible for subsidized coverage or having a change in eligibility (whether the individual is enrolled in the marketplace)
8. Proving that the individual meets other exceptional circumstances as the marketplace may provide.

The loss of “other health coverage” (#1 above) would cover the question pertaining to COBRA. This would mean the exhaustion of COBRA coverage, the 18, 29 or 36 month period of availability for the COBRA participant.

It does not pertain to voluntary cessation of COBRA coverage before the end of the maximum COBRA period. This would not qualify as a special enrollment event. Choosing to enroll in COBRA coverage commits the participant to remain on that coverage for the maximum period or until the next marketplace open enrollment period to avoid a gap in coverage.

This does not pertain to the termination/loss of coverage due to failure to pay COBRA premiums on a timely basis.

But: if voluntarily terminating COBRA existing coverage causes the participant to be NEWLY eligible for a subsidy under the marketplace guidelines (#7 above) it would seem that it would be permissible to enroll in marketplace coverage without waiting for the open enrollment period. If COBRA is dropped and the individual does not qualify for the federal subsidy, they must wait until the next open enrollment period. Having terminated COBRA coverage and not eligible for the Marketplace coverage, it would leave them with no health coverage until the open enrollment period.