COBRA vs. Private Market

If you are self-employed, a retiree who does not yet qualify for Medicare, a student, or a part-time employee who does not receive employer paid benefits, you may have an individual health insurance plan. For those who are currently considering their options when it comes to individual health insurance, whether you are going back to school, you recently got laid off from your job, are currently unemployed or recently retired, here are a few things you may want to consider before you decide how to obtain health coverage:

1. 1. What are your priorities? If you want what’s kindest to your wallet, COBRA is not always the cheapest, or the only, option for those who have recently left a job or been let go. The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) allows workers to extend those benefits for up to 18 months after leaving a job. The down side: employers no longer pay their portion of the plan’s premium, which can be anywhere from 75 to 80 percent of a plan’s cost. By keeping the coverage and paying the employer portion, you will be paying a significant amount more for that coverage than you did while you were working for your employer. Rates vary according to what the employer paid and which type of plan you elected, but on average you will pay between $400 and $500 per month for COBRA.

1. If you’re looking for convenience and accessibility, COBRA may be your best bet—your employer will send you the paperwork shortly after you leave your job and you will have 60 days to opt in or out, making it an easy and convenient route to obtain ongoing coverage for the next year and a half.

1. Do you have pre-existing conditions? This is a major factor to consider when determining how you will obtain individual coverage. Another major advantage of COBRA is that you will not be denied coverage due to pre-existing conditions. So if you have seen specialists for a certain health issue recently, or having a major condition you are frequently treated for, like Diabetes, Asthma or Depression, COBRA may also be easier to obtain than going to the private market.  If you do have pre-existing conditions, it is more difficult to obtain an individual plan at a reasonable rate in the private market.  Still, it is possible to get coverage—you just need to apply to a few companies and compare rates.

1. Shopping  for rates isn’t as hard as you think. There are ways to compare rates other than calling each and every insurance company. One way is to go online to sites like www.ehealthinsurance.com, where you can get free live quotes for individual plans just by typing in some basic info about yourself including your age, gender, location, whether or not you use tobacco and if you are a student.  Based on your information, the site will display a number of quotes from different insurance companies. If you like the looks of one and are comfortable with the deductible and monthly payments, you can apply right online. Think of it like shopping online for the best airfare rate or a new sweater, only you’re shopping for the best insurance!

1. Independent insurance agents can help you find a plan right for you. You can even find one of these on the internet, and the person will help you do your health insurance shopping and will find you the best rate for a plan that includes everything you need. So if you want a PPO with a certain rate for prescriptions and co-pays that includes an annual physical and some ER coverage, they will shop with different insurers and get back to you with the best rates from a few different companies for this coverage you requested.

Written by Kelly Matlock