Is COBRA my best option? This question has come up three times over the last two weeks and because of that, I thought it would be helpful to give you some information on how to decide if COBRA is your best option.
In 1985, Congress passed a bill called the Consolidated Omnibus Budget Reconciliation Act, or COBRA for short. Before 1985, if an employee changed jobs, was fired, divorced, etc., the employee would be at risk of losing their group benefits. Under COBRA, the employee and in many cases, the spouse and children, have the option to continue group benefits for a limited amount of time, most often at their own cost.
The reasons for an employee being eligible for COBRA would include:
- Termination or reduction in hours (exception would be gross misconduct)
- Divorce or legal separation from a covered employee
- Death of a covered employee
While an employee is active, employers normally pay a portion of their healthcare coverage. While under COBRA, the employer no longer is required to do this. This means that not only will you be paying for the full price of the insurance, but also an additional 2% in administrative costs. And this brings me to answer the question that has been asked over and over again.
If COBRA is going to cost me an additional cost, will it be worthwhile to take or should I look at lowering my insurance costs by getting another plan?
The answer relies on what the price of COBRA will be plus any deductibles, co-pays, etc.
Let’s look at this example:
Cost of COBRA – $1200 a month for a family of two (Mother and high school student)
Deductible under COBRA – $2,000 with a maximum in out of pocket costs of $4,000.
Co-payments $20.00 Primary Care $40.00 Specialist
Another plan – $900.00 a month for a family of two
Deductible under another plan – $7,500 with a maximum in out of pocket costs of $15,800.
Co-payments 20.00 Primary Care $40.00 Specialist
In this example, the premium of the second plan is lower, but the deductible and out of pockets costs are higher. In this example, the high school student had some medical issues that needed her to have access to physicians in Boston. She could still see her physicians while on COBRA and wouldn’t be able to do so on another plan. The answer to this example was simple. Stay on COBRA.
Another case may be totally different. Another person may be eligible for a tax subsidy which could reduce not only the health insurance premium, but also the deductible and out of pocket costs. In that case, COBRA won’t be the best option.
The answer to the question really relies on the circumstances. At Balanced Care, we prefer to give you a side by side view of what COBRA costs compared to what another plan would cost. We show you the differences, the network, and what to expect in out of pocket costs. From there, the answer will stand out for you.
With Balanced Care always standing in your corner, you will have the confidence of knowing and seeing why COBRA is or isn’t your best opportunity for what best suits you.
Terri Trepanier is the owner of Balanced Care Health and Supplemental Insurance and a licensed insurance consultant and broker with Associated Brokers. Licensed in both Maine and NH, her specialty is working with small businesses, individuals, and families with their health and life insurance needs. She is certified to offer health plans both on and off the exchange and is contracted with every health insurance company that offers plans in both New Hampshire and Maine. Her other passion is assisting Medicare beneficiaries with their Medicare Supplemental, Medicare Part D Prescription Drug Plans, and Medicare Advantage plans. Terri has seen firsthand the importance of insurance products and how they help families. Her goal with Balanced Care is to “Insure Security and Peace of Mind One Family at a Time”.