27 September 2015

Health Insurance Gaps

I had been worried whether I should take COBRA health insurance coverage before my new policy becomes active, despite the fact that I most likely (P > 3sigma) won't need it. It turns out that if I have a gap in coverage less than three consecutive months, I won't have to pay any penalty.

For the curious, the penalty is prorated on a monthly basis, but billed yearly. For FY2015, one pays max(2% income above filing threshold, $325). The penalty increases in FY2016 to max(2.5% income above filing threshold, $695).

[1] http://healthinsurance.about.com/od/Penalty-Exemption-Uninsured/fl/9-Things-to-Know-About-the-Shared-Responsibility-Health-Insurance-Penalty.htm

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