I have recently quit my job to freelance and I am now in a position where my old health insurance ends on 8/31, but my new health insurance can only begin as soon as 10/01. However, until 10/31, I can choose ("elect") to continue my prior health insurance coverage under COBRA .
In a perfect world, I could ignore this COBRA election form for the time being, knowing that if anything bad were to happen to me in September, I could always elect to continue my COBRA at that time.
Is this a correct understanding of how COBRA works?
If so, will there arise a situation in which I have health insurance in spirit but not in letter in September, thus subjecting me to the tax penalty under the Affordable Care Act?