Discontinuing COBRA mid-month
December 28, 2020 9:19 PM   Subscribe

Is it possible to stop COBRA coverage mid-month? The COBRA administration company is saying that it isn't. We got new insurance through an employer starting 12/7 and don't/didn't need the COBRA coverage after that.

The previous employer (and provider of the COBRA plan) is a company based in Massachusetts. We live in North Carolina. There is a significant amount of $$ at stake since the monthly COBRA premium is substantial.

Does anyone here have a clue to offer me? I don't want to waste anyone (else)'s time, especially my own.

--> Whom to contact with more questions - I have already found the contact information for the NC Dept. of Insurance (not sure whether I should contact the regional office, the Life & Health division, or the general inquiry contact), and the US Dept of Insurance. I suppose the MA Dept. of Insurance might be another potential line of inquiry.

--> Refund possible? Adding to the complexity is that they already have our payment for the whole month (and next month, which latter they have already said they will refund).

The COBRA administration company, Optum, is saying that they will only do whole months and that therefore they will keep our money for all of December.

I am also considering just trying to cancel for all of December, leaving a seven-day gap in coverage and inconveniencing one small provider who might have to re-file or be paid solely by us, but that would be OK with me. I'm pretty sure this would not be possible since those seven days are in the past, but who knows, maybe there's some obscure employment/COBRA provision I don't know about.
posted by amtho to Law & Government (6 answers total)
It is very common for insurance to only do whole months. Some do, some don't. I've had employers who do it both ways (insurance starts on the first day of work and ends on the last day; or insurance starts on the 1st of the month after you join and ends on the last day of the month you leave). I'm not sure if they'll let you retroactively cancel all of December (unlikely, but possible?) But I'd definitely do that if possible - a 7-day gap in coverage is fine (especially since the time has passed and you know you don't need healthcare during that period). But there's nothing shady going on here.
posted by brainmouse at 9:37 PM on December 28, 2020 [1 favorite]

IANABenefits Professional, but for future situations: You can enroll in COBRA retroactively within your eligibility period.

So say Employer A's coverage ran out on 11/30, and Employer B's coverage started 12/7. I would choose not to enroll in COBRA for the interim period. If something happened on 12/3 and I needed to use insurance, I could retroactively pay for COBRA and have those bills covered. If I didn't need to use insurance during that period, I save significant $$$.

YMMV based on your health situation.

In this case I think you're out of luck since you already paid for coverage in December.
posted by matrixclown at 9:49 PM on December 28, 2020 [1 favorite]

Response by poster: We enrolled more than six months ago, FWIW, and did wait until it was absolutely necessary as you describe. We put it off as long as we could :)
posted by amtho at 9:59 PM on December 28, 2020 [1 favorite]

Not at all unusual for them to require whole months. I don't know if you can retroactively cancel to 11/30 but you can certainly try. No harm in asking. If you have had claims filed within those 7 days that may complicate things.
posted by domino at 8:49 AM on December 29, 2020

The IRS website says you should receive a Form 1095-B from your COBRA provider to file with your income taxes. You should receive a credit on your taxes for 2020. It does not say how much, or what percent.
However, it might take some of the sting out of having to pay for a month of COBRA.
posted by halfbuckaroo at 12:12 PM on December 29, 2020

The IRS website says you should receive a Form 1095-B from your COBRA provider to file with your income taxes. You should receive a credit on your taxes for 2020.

The Form 1095-B from an insurer is just to show that someone maintained health insurance - it doesn't have anything to do with getting a tax credit. Tax credits related to the ACA come from a state/federal marketplace, not employer-sponsored coverage.

What really matters here is what the terms of the employer's actual plan say. When you notified the former employer of your new coverage, it's likely that that caused you to lose eligibility for coverage under the former employer's plan terms for COBRA. It's possible that your coverage should have been terminated as of that date, with a refund for those prospective days (or from the 15th on or something), but I suspect it's not likely that the employer's plan is written to allow partial month COBRA coverage (the COBRA administrator is likely correct). However, because it's almost December 31, it's also not likely they'd even honor a December 15 end date even if the plan operated on a twice a month cycle. When did you notify the COBRA administrator of the new coverage?

The chance that they would refund back to before your ineligibility date (i.e. Dec 1) is pretty much zero. Insurance is the transfer of risk, so trying to get un-covered once you know you didn't have any claims is...not how insurance works :) (the converse being that someone can't wait until after getting sick or injured to enroll retroactively).

Unfortunately, there is no COBRA loophole that would require retro termination on your end. Now, if you hadn't paid December, the CARES Act provides for indefinite extensions to pay for COBRA (until 60 days after whenever the federal Outbreak Period ends), but it doesn't provide for refunds.

As to who to ask, again, it's really the provisions of your actual plan that matter, not a state insurance department or federal agency, with some caveats.

--If the former employer sponsors what's called an "insured" plan, the regulatory body with jurisdiction depends on where the insurance policy was issued (e.g. Mass or NC). This is only important to the extent that that state might happen to have a special rule about retroactive termination (from my memory, neither Mass nor NC does).

--If the former employer is "self-insured," the state insurance departments are 100% irrelevant.

--If the employer has 20 or more employees (insured or self-insured) the "COBRA" you're talking about is actual COBRA, so the IRS and DOL have jurisdiction over how COBRA is offered, for how long, what notice is required, etc. (but again, there shouldn't be any COBRA provision to require what you're asking about), in addition to the state having jurisdiction over the what's in the insurance policy itself. Self-insured plans will also virtually always have more than 20 employees and be subject to federal COBRA.

--If the employer has fewer than 20 employees, "COBRA" would mean state "mini" COBRA, and whatever state issued the insurance policy has jurisdiction. But, again, as far as I can remember, Mass doesn't have any kind of retro termination provision for employees, and I'm not ever sure NC has mini-COBRA.
posted by Pax at 5:56 PM on December 29, 2020

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