If Cobra 'affordable' Can't Get Subsidy?

[SeniorGurl]

What HC.gov has for info on their site is not always reflected in the application. Once you get into the app all bets are off, and if the hair stands up on the back of your neck when you are answering incorrectly, it's for a reason. The only time I remember intentionally answering a question incorrectly is when someone is in renewal and wants to change plans. You have to say that they LOST coverage, since in a sense they did lose the plan they were on, because it changed. They should have an accurate choice so we all know what to do, and don't need a play book. The brief period of COBRA SEP was just that, brief. That's over now. I think there are even issues regarding turning down COBRA. Still...if it's affordable, no subsidy. I want someone to prove me wrong. Call Healthcare.gov and start asking but be very specific and ask for a supervisor to get a second opinion. Last night the SV said he is passing that info on so people get on the stick and STOP giving incorrect info!

 

[RayNY]

When in doubt, refer to the only official reference, ratified law!

45 CFR 155.305 section (f): Eligibility for Advance Payments of Premium Tax Credit, part (1)(B) refers you to (c)(2)(B) and (C) of 26 US code 36B. That code then bounces you to the definition under 5000A(f)

I only tell you that, because knowledge. Here's your pertinent text: 26 U.S. Code § 5000A - Requirement to maintain minimum essential coverage | LII / Legal Information Institute

Having read it, it does appear that COBRA counts as "Minimum Essential Coverage" since it is an "eligible employer sponsored plan" and it is "affordable". I'd cite the law stating this explicitly, but, I don't have the time to find it right now.

Here's a CMS/CCIIO citation instead, confirming COBRA is MEC and is considered Employer Sponsored Coverage under ACA: Minimum Essential Coverage - Centers for Medicare & Medicaid Services.

TL;DR COBRA is MEC so long as it's affordable, therefore, availability of COBRA is a subsidy disqualification.

 

[SeniorGurl]

Damn, NICE!!!! WOW!

 

[Ann H]

The problem is that COBRA is considered Minimum Essential Coverage only while you are actually ENROLLED in it.

Section 36B(c)(2)(C)(iii) and the proposed regulations provide that an individual who enrolls in an eligible employer-sponsored plan is not eligible for the premium tax credit even if the plan is unaffordable or fails to offer minimum value. Commentators asked whether an individual who enrolls in an eligible employer-sponsored plan and then terminates coverage during the plan year is treated as eligible for minimum essential coverage under the plan for the entire plan year under this rule, even though the coverage is unaffordable or does not provide minimum value. Commentators similarly asked if individuals who enroll in continuation coverage and then disenroll from it later during the year are treated as eligible for minimum essential coverage for the entire year. In response to these comments, the final regulations clarify that an individual is treated as eligible for minimum essential coverage under an eligible employer-sponsored plan by reason of enrolling in the plan or in continuation coverage only for months the individual is enrolled in the coverage.

This is from the Treasury Department (IRS) TD9590, which is the bible on subsidies. Internal Revenue Bulletin - June 11, 2012 - T.D. 9590

So, here are the issues, and the answers as I had understood them previously (meaning during this last year)...

If you are COBRA eligible can you even enroll?
1. During OEP you don't need a qualifying event, so you can go off COBRA and enroll in the exchange. That doesn't necessarily mean you get a subsidy, though.
2. Outside of OEP, you may enroll as an SEP for losing coverage under your job, so long as you have not already enrolled in COBRA. If you already enrolled in COBRA, you've exercised your SEP, and now you are stuck without an SEP until the next OEP. Sure, you can cancel your COBRA, but that's a voluntary cancellation, and therefore does not trigger another SEP.

If you are on COBRA, how do you answer the questions on healthcare.gov?
1. Whether right or wrong, I was under the impression (as was Seniorgurl) that we had a glitch in the hc.gov app, and you had to answer "yes" to the question of whether or not you have already lost coverage, rather than if you were losing it in the future. You also had to answer "no" to being eligible for COBRA. Right or wrong, that is what we were told.

If you are on COBRA, want to enroll at OEP (or another SEP), is "affordability" an issue?
1. Some people say COBRA is an individual plan, but it clearly is not. It is continuation of an employer group plan.
2. Some parts of the law stipulate that affordability applies to "employees". Whether or not this is true is something I will leave for lawyers!
3. Like RayNY cited from CMS, MEC can be employer sponsored coverage and COBRA. But that's only about it being MEC. There is a real issue about whether or not COBRA is actually "employer sponsored" since the employer is not paying anything toward the cost. And that's an important issue since the "affordability" portion of the law applies to employer-sponsored group plans.
3. So, can you get a subsidy? Let's assume that the income & household size and all other issues qualify the person for a subsidy.
4. Well, the MEC issue is out of the way if you cancel the COBRA. As stated above, if you take COBRA, it only qualifies as MEC during the months you are actually enrolled in it.
5. Next comes the affordability issue. Does this apply to a COBRA participant? I honestly don't know. During this last year, I heard that hc.gov was saying the affordability issue did not apply to former employees. I am pretty sure the final regs said it does not apply to retired employees. However, I really questioned hc.gov's answers from last year after reading the regs. I honestly don't know. I asked NAHU for advice about a year ago, and they didn't know.

 

[SeniorGurl]

UGH! I'm lost again :(

 

[Ann H]

Gosh, I read through that and thought - let's clarify this! I was "thinking out loud" as I typed, and it's too convoluted.

1. Can you apply? Yes, if it is OEP. Or at SEP if you did not already enroll in COBRA.

2. Are you disqualified from a subsidy because COBRA is MEC? No, because it is MEC only during the months you are actually enrolled in it. At OEP you might cancel COBRA, and then it is not MEC any more. You are also no longer eligible for it, because you can't get COBRA back once you cancel it.

3. Are you disqualified from a subsidy if the COBRA is "affordable". Once again, there's a question about whether or not COBRA is even "employer sponsored". But I would think that once you cancel the COBRA (and cannot get it back), then you are not eligible for it. So, why would the "affordable" rules apply?

4. How should you answer the hc.gov questions at SEP? I was told by an hc.gov rep (and others on this forum were also told) that you must say "no" to the COBRA question, and say that you already lost coverage, due to a glitch in the hc.gov app.

Most importantly, I don't know the answer. However, follow this logic, and see if you think the person qualifies.

1. It is OEP. No more problems with SEP, and how you should answer the hc.gov questions about when you lost coverage.

2. You cancel COBRA. You are not eligible to go back onto it.

3. So COBRA is not MEC, because you are not enrolled in it.

4. Also you are not "eligible for" COBRA because you cancelled it and cannot get it back.

5. Affordability rules don't apply, do they?

 

[bluediamond]

Ann is correct, during oep you answer no to the cobra question. I try to stay away from calling anyone at hc.gov, you will receive different answer's everytime.

 

[SeniorGurl]

Thanks Ann! You are awesome, and just for anyone else who is following this thread, my client was not in COBRA yet, he is still employed...leaving at the end of the year. He has not elected it yet. Thanks for everything team! We are applying due to unaffordability and should get in that way. I am going to try and stay clear of these cases.

 

[Yagents]

During Open Enrollment

During the Open Enrollment period you can drop your COBRA coverage and get a plan through the Marketplace instead. This is true even if your COBRA coverage hasn't run out.

You may qualify for premium tax credits and other savings on a Marketplace plan. This will depend on your income and household size.

Pretty black and white to me, right off HC.gov

1. You can drop Cobra during OEP
2. Subsidy availability defaults to the same rules as everyone else (Income)

Also, a widowed or divorced spouse can keep Cobra with never working for or having ties to the employer. If both spouses on group, and employee drops group, then non employee spouse loses coverage. If both spouses on Cobra, and one drops the plan, the other spouse can still continue Cobra.

Cobra is based on individual rights to continuation of current coverage, and protection from the pre-ex conditions of yesteryear. It is outsourced to a TPA, with no interaction with past employer, or funding from said employer.

MEC in this situation is considered only for avoidance of the penalty.

 

[Ann H]

I talked to SeniorGurl on the phone at her request. It seems this client is in the COBRA window to elect coverage, so there is no coverage for him to cancel. So, he will have to answer "yes" to being eligible for COBRA. Fortunately, they believe it won't be "affordable", so he will probably get the subsidy anyway.

In talking to her, we came up with several scenarios:.

1. Person is already on COBRA. Cancel it. You can't get it back once you've cancelled it. Now, answer the "are you covered" and "are you losing coverage" questions honestly, and answer "no" to being eligible for employer sponsored coverage. This should work during OEP. Voluntarily cancelling COBRA won't work during SEP.

2. Same situation, but the person is in their 60 day window to elect COBRA. You can't cancel it. So, pay full price for an on-exchange QHP for 2 months until the COBRA election window is over, then complete the income portion of the subsidy app to get a subsidy from that point on.

In her case, the person doesn't have to pay full price for 2 months, because the COBRA is most likely unaffordable.

As for those tricky hc.gov questions where you have to say "no" to "are you currently covered", and "no" to the COBRA question to make it work correctly, I read in SeniorGurl's post above that the hc.gov rep said to answer the question as if it is 2015. That makes sense, because they want to know those answers as of the insurance effective date. But I wish they would word the questions better so it doesn't feel like you are answering the question wrong. What is wrong with saying, "As of the proposed effective date of your new coverage for which you are applying........".