Q. I’m planning to leave my job to become self-employed in June. My insurance will end on June 30, but I have an option to take COBRA. Do I qualify for a special enrollment period to get an individual plan in the exchange as of July 1, or do I have to take COBRA?
A: You do not have to continue your plan with COBRA. You qualify for a special open enrollment if your employer-sponsored insurance is ending (assuming it qualifies as minimum essential coverage), even if you have an option to extend it with COBRA. Your special open enrollment begins 60 days before your current policy ends, and you’ll be able to complete your enrollment as late as June 30 and still have coverage effective July 1, as loss of coverage is a qualifying event that has special enrollment deadline rules (normally, in most states, you have to enroll by the 15th of the month to have coverage effective the first of the following month; but there are different rules if you’re enrolling due to loss of coverage).
If you do elect COBRA, you cannot later drop it outside of regular open enrollment and opt for an individual plan instead – electing COBRA essentially waives the special open enrollment triggered by losing your employer-sponsored coverage. You have an additional 60 days after losing coverage to enroll in an individual plan, so you can take your time and compare COBRA with individual options that are available (you’ve also got 60 days to decide whether you want to elect COBRA, with coverage retroactive to coincide with the date your plan would have ended).
When comparing COBRA with a plan in the individual market, be sure to factor in premium tax credits and cost-sharing subsidies if you qualify for them. Your special enrollment period applies both on and off the exchange, but if you’re eligible for subsidies, you’ll need to get your plan through the exchange.
If you elect to take COBRA and later decide that you’d rather have an individual plan, you’ll have to wait until the next regular open enrollment, unless you have another qualifying event. Exhausting COBRA also triggers a special open enrollment window, because it counts as loss of other coverage. Open enrollment will begin each year on November first, for coverage effective January 1 of the following year.
Open enrollment will begin each year on November first, for coverage effective January 1 of the following year. So if you do decide to change your mind, you’ll never have to wait more than a year to do so.