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Personal Finance from the Broke Perspective

Temporary Health Insurance Options

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Temporary Health Insurance Options

My husband accepted a new job in another area of the country, allowing us to relocate to a place that we prefer from one we didn’t care for as much. His salary has increased significantly, and he feels the job will be better for his mental health and his career. The only difficulty is that he will not qualify for health insurance during the first two months he’s employed. We’ve searched for temporary health insurance options, but there aren’t many good options.

Why Not Go Without Health Insurance?

We could always take a chance and go without health insurance, but we’re not young; we’re firmly in middle age, so we visit the doctor more than we used to. Plus, young, middle-aged, or old, on any given day, we could be involved in a catastrophic health event such as having a car accident or being diagnosed with cancer.

My husband and I aren’t gamblers, so we don’t feel comfortable foregoing all health insurance options.

Utilize the Spouse’s Insurance

Another option for many couples is to utilize their spouse’s insurance during this time. However, I am a freelance writer, so my only insurance coverage is through my husband’s employer. This option is not available to us.

COBRA Is an Expensive Option

When my husband leaves his current employer, he can opt for COBRA insurance. COBRA allows us to retain our current insurance for the two months we’re without health insurance with the new employer. However, rather than paying our portion of the health insurance premium, we also pay the employer’s portion. Therefore, we would need to pay $1,659 a month for COBRA insurance or $3,318 for the two months we’re without insurance. Ouch!

Insurance Through the Affordable Care Act?

Temporary Health Insurance Options

I looked into the Affordable Care Act, but getting insurance here is not much more affordable for us than COBRA. Insurance here is based on your income, and my husband’s income is good, so theoretically, we can afford to pay more.

We would need to pay nearly $800 a month for health insurance, and we would also have a high deductible. The insurance would only cover us for catastrophic events until after we meet the high deductible.

Insurance Through Our Car and Home Insurer?

We also looked to see if our car and home insurer offers medical insurance. The company does, but not in the state in which we’re moving.

What We Decided

Ultimately, we looked at our temporary health insurance options and decided to take advantage of a stipulation in COBRA. You have up to 60 days after leaving your employer to apply for COBRA. When you do, you pay for the time since you left your employer and are retroactively covered.

So, if the next two months don’t involve any health issues, we can save ourselves $3,300 in COBRA premiums. If we do need insurance coverage, we will pay for COBRA. This is a bit like gambling, but a safer way to help us stay protected while potentially not costing us thousands of dollars.

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How to Use Retroactive COBRA Insurance

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Retroactive Cobra Insurance

When my husband quit his job in Illinois to pursue a new job in Arizona, we were shocked that our coverage in Arizona wouldn’t start until a month after his official start date.  Since we moved to Arizona a month before his job started, we were without employer-sponsored health insurance for two months.  What I wish I would have known then is that you can apply for COBRA insurance retroactively.

What is COBRA Insurance

When you leave a job or lose a job or lose insurance because of a reduction in hours, you can apply for COBRA insurance.  If you were enrolled in employer-sponsored insurance and your employer has 20 or more employees, you’re eligible for COBRA insurance.  COBRA will give you the exact same insurance coverage you had with your employer.  The difference is that you must pay the entire premium yourself.

When you get employer-sponsored insurance, you typically pay only 20 to 30 percent of the total cost of the premium.  Your employer pays the rest.  With COBRA, you assume the entire amount, which isn’t cheap.  We did opt for COBRA insurance when my husband left his job, so we paid $1,200 a month for coverage for our family of five.  What I didn’t know then is that I could have utilized retroactive COBRA insurance.

What Is Retroactive COBRA Insurance?

You can choose not to buy COBRA insurance.  In our case, we had COBRA insurance for the two months we were between employer-sponsored insurance, but we never used it.  We paid $2,400 total over the two months for insurance we didn’t even need.

Retroactive Cobra Insurance
Photo by Olga Guryanova on Unsplash

Another option is to forego COBRA and go without insurance during this time.  If you end up having a medical need, you can still sign up for COBRA because COBRA is retroactive from the time you left your job or lost your insurance.  For instance, one woman and her husband opted not to get COBRA when they lost insurance benefits.  Within a month, her husband had to have an emergency appendectomy.  They were facing tens of thousands of dollars in medical bills.  The couple completed the forms for COBRA, and the insurance paid the bills for the appendectomy.  They ended up paying just $42 out of pocket for the surgery (plus the cost of COBRA).

An Important Caveat

You only have 60 days to decide whether to enroll in COBRA or not.  If you opt out of COBRA coverage and need surgery on day 65, you won’t be covered if you try to retroactively apply.

Also, when you retroactively apply, the insurance benefits begin the day after you lose your benefits with your employer, but you also have to pay from that time, too.  So, if you sign up for COBRA on day 58, you also have to retroactively pay for days one through 58 of coverage.

Final Thoughts

COBRA coverage can be an important insurance bridge when you’re between jobs.  If you want to initially forego COBRA insurance, you can.  If a medical need comes up, you can always apply retroactively.  But remember, this only applies for the first 60 days you’re without insurance.

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My Wife Quit Her Job: The Hits Keep On Rolling

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It would appear that the saga is far from over.  (If you want the full story, you can read part 1 of My Wife Quit Her Job) Just when you think you can’t handle any more of a challenge, a little more gets thrown on top.  Obviously, God knows we can handle more.

Since my wife quit her job, we’ve been paying for Cobra health insurance to continue with the coverage that we had.  It was a bit of an increase since you pay for the company portion as well as what you would have normally paid, but we had already met our deductible and it pays 100% after that.  That full coverage bit helped us justify the extra couple of hundred that we had to pay each month.  But earlier this week, we got a letter from my wife’s former employer that informed us that the cost of the insurance would be going up and that beginning on the 1st of September we would have to pay that.

I probably don’t have to tell you that the increase puts an even deeper kink in our financial situation.  We may have to lose the 100% coverage in exchange for the plan that I get from work.  It’s only marginally cheaper than the original Cobra price, but even more so now that we’ve been hit with this increase.  The only part I haven’t worked out is if we would be better off keeping the Cobra coverage until the end of the year.  Any new deductible that we might have to meet may offset any extra premiums that we would have to pay.  Decisions, Decisions.

On a brighter note, the business that my wife and her friends started is still doing well.  She’s even expecting to get her first paycheck from the new company this month!  Certainly not a full paycheck, but getting closer.