COBRA–good news or bad news? These days people are either losing their jobs, their health insurance or both. What do you do? I know people aren’t always thrilled with their group health insurance plans but it’s scarier to think of being uninsured if you’ve ever heard the costs one can incur. But then you find out how much your COBRA coverage will be and wow–you need it at least long enough to get out of the CCU from your heart attack.
When COBRA, the option to be able to continue your health coverage when leaving a job first started years ago, people generally thought it was great. This applies to companies with more than 20 employees. But the cost of many group plans is extremely high; most didn’t realize how much their employer was paying to cover them. With COBRA, you pay the entire amount of the premium plus 2-4% administrative costs. In California, we have CalCOBRA which functions similarly but with administrative costs of about 10%.
So now, what’s the big deal? Why is COBRA so great? Well if you are insurable on an individual plan you don’t need to stick with the COBRA offering. But if you aren’t insurable, all of a sudden it’s usually the best deal in town. You need to decide within 63 days of when your coverage ended whether or not to take it. What I’ve done with several families is help them select individual health insurance plans for the members of the family that are insurable and leave the ones that aren’t on the COBRA plan. And it doesn’t always have to be the former employee that stays on the plan, you need to find that out from your former employer.
So check out your options. You might be surprised at the possibilities. Contact an independent agent, like me, before you throw in the towel.
Be well!
Tags: CalCOBRA · COBRA · Group Health Insurance · Health insurance · Individual Health Insurance2 Comments
2 responses so far ↓
Hi Colleen. I lost my job in Sept. 09. My employer is paying for 6 months of Cobra, which will end in March 2010. I have major pre-existing conditions which would make me uninsurable on an individual plan. Are there any other group plans I could join, such as a religious or professional organization? Do you have any similar recommendations? Thanks.
HI Jody,
Sorry to be slow in responding!
You are really stuck between a rock and a hard place in this case. Examples such as what you asked about, either religious or professional organizations, are generally going to be ‘association’ plans. These types of plans you usually have to go through underwriting so you are in the same boat.
When did you lose your job? The COBRA subsidy has been extended, so if you lost your job between September 1 2008 and now February 28th (which obviously you have) check into continuing your COBRA with the 65% subsidy. The length of time you can keep that has also been extended from 9 months to 15 months, so hopefully that will make it more affordable.
If you are in California and have a small business, minimum of 2 employees, you can consider a small group health plan. They are guaranteed issue regardless of your health status when your business is set up within specific guidelines.
Best of luck on this, I know it’s a huge problem for a lot of people, and I hate when I don’t have the answer.