Health insurance while changing jobs?
October 15, 2013 10:11 PM   Subscribe

Would I be penalized for not having health insurance in the US for three months while changing jobs?

I start a new job next week. The health insurance doesn't kick in for three months, but as I understand it one suffers a tax penalty under ACA if one doesn't have health insurance.

Presumably, this only applies at the point of doing your taxes? Is it okay if I am health-insurance-less for three months? (I'm 26 years old with no serious health problems, so I think it's okay on a health level.)

Either way, what are my options?
posted by lewedswiver to Work & Money (14 answers total) 1 user marked this as a favorite
The ACA doesn't kick in until January 1st at the very soonest. When does the 3 months end? And do you have access to COBRA if you need it (generally COBRA can be elected retroactively for a time)

Just so you understand what you're doing -- if you get into, say, a car accident that requires several nights in the hospital and several leg surgeries (a problem my friend encountered recently), you will never recover financially if you don't have health insurance in that time. Ever. It will be hundreds of thousands of dollars of debt. It is not OK to be health-insurance-less for 3 months in the US unless you are 100% accident-proof.

Temporary health insurance is generally not super expensive, even if it's catastrophic coverage only (depending on what state you're in and a lot of other things). Please look into it.
posted by brainmouse at 10:17 PM on October 15, 2013 [5 favorites]

It is not OK to be health-insurance-less for 3 months in the US unless you are 100% accident-proof.

Given that something like 15% of the population has no health insurance, I think that this is out of line. I haven't had insurance in almost two years, and when I looked at COBRA, it was something like $1200 a month for two people. That's more than half of my monthly household income. Insurance is great, but for some people, it's a financial impossibility.

I'm not saying that it's fantastic, but a three-month waiting period is pretty typical when you start a new job, and people suck it up and hope for the best. If you can afford COBRA, or if you're able to purchase an inexpensive short-term policy from the exchange, then by all means, do that, but not having insurance for three months isn't the end of the world.

Anyhow, being insurance-less for a short period of time is ok under the ACA. If you go here, scroll down for Specific Rules and Process for Receiving an Exemption. Fifth on the list is "Individuals who experience short coverage gaps." I can't imagine that "waiting for my employer-funded coverage to take effect" wouldn't fall under that heading, especially because you'll really only be spending three weeks of the must-have-insurance timeframe uninsured. If you can pick up interim coverage, great, but otherwise, don't sweat it.
posted by MeghanC at 10:55 PM on October 15, 2013 [3 favorites]

I apologize in advance for not answering the penalty question, as I don't know the answer... but I'm with brainmouse. You don't want to be in the 15%. The 15% is the whole reason why we now have universal coverage!

A 26 year old Seattlite could go onto the health exchange and pick up catastrophic insurance for around $150/month (I just checked). If you got very badly hurt or sick, you might need to shell out $6350 for your care -- a tidy sum, but nothing compared to the hundreds of thousands of dollars you could owe without insurance.

FWIW when I was between jobs six years ago I got insurance easily through eHealth.
posted by rouftop at 11:18 PM on October 15, 2013 [3 favorites]

Surprised nobody has mentioned that many insurance companies won't even insure you if you have a gap in coverage. When your last job ended you should have received a Proof of Coverage letter from your former insurer, to provide upon request to any subsequent insurer. Insurance companies do not like gaps in coverage.

You can find gap insurance through Assurant. It's cheap and you pretty much get what you pay for. But yeah, if you step off a curb and break your ankle, get a cancer diagnosis or are whacked in the head by a toilet seat that falls from the space station, you'll be glad you have it. It's never a good idea to be without health insurance. Elks Club spaghetti fundraisers only net you so much.

ACA kicks in January 1st. Even if you sign up today, it will not help you until then.
posted by AnOrigamiLife at 11:55 PM on October 15, 2013 [2 favorites]

Regarding ACA, yeah, you have 2 months, and honestly the tax is negligible. As far as I know in 2014 the grand total would be a whopping $95 dollars.

Did you get a Proof of Coverage letter from your previous employer/insurer? They're required to. If you're in CA, take a look at the de2320 too -

But honestly, your best option is likely COBRA - essentially you pay what your employer paid for your insurance. You get the group rate, but have to pay the full premium. Check your state laws, too, as CAL-COBRA has slightly different laws. Obviously I live in CA, so those are the laws I know best.

If COBRA's not an option, then, yeah, you probably want to grab a high deductible catastrophic insurance in the meantime.

Not your tax/lawyer/this is not advice etc.
posted by OrangeDrink at 12:23 AM on October 16, 2013

As for the penalty, please note that it is pro-rated (although I am not yet aware of a posted schedule):

The amount of any payment owed takes into account the number of months in a given year an individual is without minimal essential coverage or an exemption.

That could mean a penalty per month (of no coverage) amounting to around $8.

(I am also beginning to suspect that the White House may be forced to delay the 2014 mandate penalties unless the problems with the exchange online signups are fixed very quickly. But you can't bank on that.)

I'd look into the gap coverage option.
posted by dhartung at 2:15 AM on October 16, 2013 [2 favorites]

In NY we have HealthyNY, which is health coverage for those who don't get it through an employer. I would check through your state's social services site to see if they offer something similar. Also - yes, COBRA. I've been on it for 18 mos (This is my last month, alas). Often you get much fuller coverage than catastrophic insurance, often at about the same price. Good luck!
posted by Meep! Eek! at 4:57 AM on October 16, 2013

If your parents have health coverage, you should see if you're eligible to be on their plan for this period. The ACA expanded the dependent coverage to those under 26, but some states (like NY) have the limit higher (age 29 in NY, 31 in NJ); individual policies may have different qualifications above the state/federal minimum.

Please get at least a catastrophic (ER) plan. Your age doesn't make you immune to appendicitis (which affects one in 15 Americans each year, most commonly between ages 10-30; appendectomy costs an average of $33K but up to as high as $180K, depending on which hospital you end up at).
posted by melissasaurus at 5:17 AM on October 16, 2013

The linked appendicitis rate is 1 in 15 life time not 1 in 15 annually.
posted by Mitheral at 5:38 AM on October 16, 2013 [2 favorites]

The penalty is $95, and it's pro-rated. But it doesn't kick in until Jan 1.

Also any insurance you get through the marketplace won't start until Jan 1.

I'd recommend checking out a high deductible plan (cheaper) for major medical, for the three months you'll be without. It'll be cheaper than COBRA, and you'll be covered.

But if you want to roll the dice, there shouldn't be any issues.
posted by Ruthless Bunny at 5:56 AM on October 16, 2013

The fee for not being insured next year is $95.00 or 1% of your income, WHICHEVER IS LARGER, and it goes up after that to a max of 2.5% of income in three years. Catastrophic plans are only available through the exchange if you are YOUNGER THAN 30. If there is a gap before you are insured in 1014 you could buy a policy through the exchange to cover you for January, for instance, but you'd have to buy it by Dec 15 for it to be in effect in January. Although the exchange will be open until March next year, there is no such thing as retroactive coverage, so you wouldn't be able to wait till February to buy covereage if you had an accident in January. As others have mentioned, a 3 month gap will not be penalized, but if you are uninsured and do get, say, appendicitis, you will be responsible for the cost.

If your employer is offering coverage you won't need the exchange (except possibly for any gap before it begins) - it's for individuals right now, though in one year the mandate for employers with 50 or more employees to offer insurance (or pay a fine of their own) will go into effect. This is the part of the ACA that was postponed for a year.
posted by citygirl at 7:48 AM on October 16, 2013

The linked appendicitis rate is 1 in 15 life time not 1 in 15 annually.
That's what I get for posting before coffee. Thanks for the correction - I read correctly but typed incorrectly. Notwithstanding the typo, I standby the rest of my post.
posted by melissasaurus at 8:19 AM on October 16, 2013

You can retroactively enroll in COBRA for up to 60 days, you just have to pay the back premiums if you decide to enroll. The last time I switched jobs, I deliberately remained without coverage for the waiting period at my new job, with the idea that if something catastrophic happened, I would retroactively enroll in COBRA. In my case, the waiting period for my new benefits was less than 60 days, though.

Surprised nobody has mentioned that many insurance companies won't even insure you if you have a gap in coverage.

Somebody correct me if I'm completely off-base, but won't the ACA make this illegal? Maybe not in time to help the OP, but still. At any rate, I've never heard of gaps in coverage being an issue with employer-sponsored group plans, just individual ones.
posted by Violet Hour at 11:55 AM on October 16, 2013

The problem with having a coverage gap had to do with with the practice of refusing coverage because of pre-existing conditions - continual coverage got around this since insurers could not invoke this if someone was continuously insured. Obamacare removed the entire pre existing condition barrier with this round of implementation so the whole issue is gone. Gone!! This barrier was removed first for children 2 years ago I believe. Now it's our turn.
posted by citygirl at 3:32 PM on October 16, 2013

« Older ID Theft Victim. Cleanup has begun, what am I...   |   SSAS cubes on iPads? Newer »
This thread is closed to new comments.