Question: In August 2012, I was laid off from a job where I was making $60,000 per year. I collected severance for the next 6 months, and have been paying COBRA $585 a month, which is to run through February 2014. If my income during 2012 was $60,000, but income for 2013 will only be about $30,000, then: 1. Is Cobra being phased out in the U.S.? 2. Is my health care exchange premium based on income for 2012 or 2013? And, 3. Is it possible my outlay for insurance could cost more than the COBRA payments I'm paying now?
Answer: COBRA remains in effect under the Affordable Care Act. However, COBRA coverage will usually cost more than coverage obtained through an exchange, since it requires that you pay both your share of the premium and the share your employer had been contributing.
If you purchase coverage through an exchange, the subsidy is based on your income during the year the policy is in force. That means your subsidy for a policy that is effective in 2014 would be based on what you earn in 2014. If that remains at about $30,000, you would be eligible for one.
The exchange will ask for your 2013 income as an estimate of your expected earnings in 2014. However, you can provide a more accurate estimate, if you expect it to change. If the change from 2013 is greater than 10 percent, you may be asked for documentation or, if you have none, for an attestation of the change. Regardless of the amount you estimate, it will be reconciled with your actual 2014 income after the year ends, so you may qualify for a subsidy retroactively.
It is not likely that a policy you buy on an exchange would cost more than your COBRA coverage. Exchanges also offer the ability to select among policies at different coverage levels with different prices. You can estimate the cost at your income by using the calculator developed by the Kaiser Family Foundation, which you can access by clicking here.
Robert I. Field, Ph.D., J.D., M.P.H. is a professor of law at the Earle Mack School of Law and professor of health management and policy at the School of Public Health at Drexel University. He also writes for The Field Clinic blog. Ask Rob your questions about the new healthcare law.