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Health Insurance and COBRA–what should I do now that there’s a subsidy?

May 10th, 2009 by Colleen

A couple of months ago I did an article on COBRA coverage: how it works, and why you should or shouldn’t take it.

Now that there’s a subsidy of 65% for people involuntarily terminated after September 1, 2008, the picture changes somewhat. Depending on how much the 35% you have to pay is, that 65% can be pretty tough to turn down. But I still have a couple of caveats for you.

This only lasts 9 months. With any luck, during that time you will have another job, with benefits, and you don’t have to think about this any further. Normally when someone is offered COBRA I suggest they look at an individual plan if they are potentially insurable because anyone can have something develop or happen to them that could render them uninsurable.

I still think you have to give that serious consideration but I know that subsidy is REALLY tempting. Here is what I think you should consider. If buying the coverage is on your own is less than the 35% you’d need to pay, then look at individual plans. Whenever someone elects to take COBRA for a family, but not everyone needs to be on COBRA, meaning they are insurable, look at individual plans. Especially if you don’t qualify for the subsidy. You need to look at all options for your situation, which is why an independent agent in addition to your HR person at work is important.

If the cost issue with the subsidy is close, maybe the plan on your own is slightly more than your COBRA cost, consider getting your own coverage, again, just in case. It’s all a matter of what’s going to make things easiest for you to handle.

Be well!

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  • 1 Erik May 18, 2009 at 5:19 pm

    I do get your point that I know that subsidy is REALLY tempting. and not everybody needs to be on COBRA. All we need is just look for other options that suits our present situation for the future.

  • 2 Colleen Jun 3, 2009 at 5:06 am

    Thanks Erik–

    That’s why people really need to seek out a reliable, unbiased source to help them with this decision. Most people I encounter aren’t fully versed in this, and why should they be? My goal is to help people understand the basics, then evaluate their situation so that they are comfortable with their decision.