I’m the event of a layoff and you find yourself using COBRA for insurance, if you have an HSA account, you can utilize the HSA account to pay the premium(s) as it’s considered a qualifying event & expense (tax free no penalty).
Putting that out there for awareness versus using your personal cash. If you utilize personal cash, it is eligible for reimbursement from your HSA.
Before you decide to use COBRA, please checkout the Healthcare.Gov site. Filter the plans on "Eligible for an HSA". There were 9 different plans available, for me, when I ran the search. These plans allow you to use HSA funds TO PAY FOR PREMIUMS. There was one UHC Bronze plan that was similar to the plan I had at Schwab, and though the deductible was much more expensive than the Schwab plan, the premium was significantly cheaper than COBRA. FYI and good luck!
Who is OP what is the DP can you plz CC or BCC
This is wonderful information. Something else to consider- if you can afford to make health insurance premium payments without tapping into your HSA, you could wait to take a reimbursement at retirement (keep your receipts). This way, the part of your HSA that is invested will continue to grow while the reimbursement amount will remain constant.
Losing a job is a qualifying event even if offered COBRA and decide it's too expensive, so you are not limited to open enrollment - just have to enroll within 60 days -https://www.healthcare.gov/unemployed/cobra-coverage/
Do any of you know how much the COBRA lump sum payment covers?
Thank you to OP for an useful post preparing us for what’s next instead of just venting.
@lli+1oJIC0r3 Yes you can use the Schwab payment contribution money for anything quite honestly.
If you find insurance in the marketplace that is cheaper, you can utilize that money towards that. The key is that you’ll have to do that in the open enrollment period.
If you start Cobra after you are laid off (after the 60 day notification period), then decide it’s too expensive, and want to switch, then you’d have to wait until open enrollment period starts again in the marketplace or until you’ve exhausted the Cobra time period.
Can you not use the COBRA but still receive the payment from Schwab for it? If I wanted to go on the Healthcare.gov with income subsidies next year. Would that work?
This is true. Schwab provides you a portion to assist with Cobra or other insurance (it’s taxed money and received in your lump sum payment).
If you have HSA from contributions you’ve made over the years, you can utilize it without tax consequences or penalty to pay Cobra payments.
Or, utilize the money Schwab provides for Cobra or insurance (after tax) first then utilize HSA.
The layoff package will also include a portion to help cover COBRA premiums. From the severance pay plan: All participants also are eligible to receive outplacement benefits as well as a lump-sum payment to cover a portion of the cost of group health plan coverage (COBRA premiums) for you and your dependents.
Thanks, that great advice. Older folks like myself, we put money into HSA for our retirement years. A layoff always dents such plan.
Thanks, mate.