Cobra Sticker Shock, Why Is It So Expensive?

By Author: spurtz seo
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Being laid off or fired from a job is horrible. A million worries go through your mind at once including whether you will have enough money to survive until you get a new job and what to do about the health insurance you received through your employer’s health plan. It is a relief to hear that you can continue on your former employer’s health plan for 18 months, until you hear that you will have to pay the premiums previously paid by your former employer. How can it be so expensive? This is the dilemma of COBRA Health Insurance Coverage.

COBRA, Consolidated Omnibus Budget Reconciliation Act, is a law that requires employers to offer continuation of the health insurance coverage offered by their former employer in the event of the employee’s involuntary termination from his job. COBRA is temporary, usually for a period of 18 months, and the premiums due under COBRA are the responsibility of the individual, not the employer. This means that the individual pays both his employee share and the employer share of his and his family’s health insurance, which can be very expensive.

WHY? Your employer purchases ...
... group health insurance from insurance carriers. Group health insurance is only sold to businesses, and covers all eligible employees, as well as employee dependents.

So what are your options:

1) Continue coverage under COBRA and pay the expensive premiums

2) Let your medical insurance lapse and have no health insurance at all

3) Join your new employer’s health insurance plan

Option 1 – continue coverage under COBRA

COBRA is an expensive band-aid that offers you and your family no permanent solution. It is temporary and lapses after 18 months, at which point you will have to decide between no insurance or your own insurance, unless you are able to join your new employer’s plan by then. But, remember that there will be a waiting period between your start date at your new job and the date you are eligible for company health insurance, and in the interim, you will need health insurance coverage. Low cost individual health insurance is a better alternative than expensive COBRA.

COBRA Health Insurance Coverage is continued coverage under your employer’s plan. This is a plan that you did not design, and was not intended to serve your family alone. Accordingly, you may be paying an expensive premium for insurance options that you do not need individually, but were necessary as part of a group plan.

Option 2 – let your medical insurance lapse and have no health insurance

The idea of being without insurance in the event of an accident or unexpected illness does not seem like a wise choice for any individual or his family, especially children. Unfortunately, too many people find themselves on the receiving end of some very bad news from their doctor. Such news is, inevitably, far worse when treatments, prescriptions and doctors recommendations cannot be followed because of a lack of insurance.
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Health reform is underway, but there is not expected to be a concrete government plan available to individuals for some time. And what the plan will look like is to be determined. With so many unknowns, waiting for government-sponsored insurance is not feasible.

Option 3 – join your new employer’s health plan

This is often the most economical, and certainly what most people hope to do, but you might not find a job for an extended period of time. Or, you may have gotten a job in a different field that does not offer health insurance. Or, there may be a long waiting period for eligibility at your new company. Maybe you have been doing freelance work and you find yourself enjoying it, would like to continue, but need a permanent solution for the health insurance needs of yourself and your family.

One of the few silver linings in the cloud of unemployment is that you are free to explore other opportunities, try out a different career. Health insurance needs should not dictate where you work or what you do.