Medical Insurance Blog

Understanding COBRA Problems and Cobra Alternatives

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People who have lost their jobs for any reason may be concerned about finding COBRA alternatives. The COBRA legislation was set up by Congress to provide protection for people who have health insurance provided by their employers. The Consolidated Omnibus Budget Reconciliation Act or COBRA was created to give people the option of continuing with insurance through the employer’s group plan for up to 18 months after termination of employment. In other words, if you lose your job for any reason you can elect to pay to keep the same insurance for up to 18 months.

It all sounds good in theory but there are a few concerns people face when considering using COBRA:

·        COBRA is expensive. People have to pay about $600-$800 for individual health insurance through this plan. Families can expect a bill of at least $1300. Most people are unpleasantly surprised by the high dollar amount they are expected to pay for continuation of their health care coverage.

·        Why is COBRA so expensive? While the person is working, the employer likely paid the majority of the health insurance premium. That was part of the employee benefits package. Once someone no longer works for the employer, the premium burden falls to the former employee because the employer is not required to pay for health insurance benefits for people who do not work for them.

·        Unemployment compensation does not pay enough to cover COBRA. Affordability is important for people who have been laid off or lost their jobs. Affording a high health insurance premium is difficult for someone who lives on unemployment compensation. Most people who use their unemployment benefits only receive a maximum of $1300 each month. It does not make sense to spend almost all of that money to provide health insurance rather than food or living expenses.

·        The government allows 60 days for someone to make the decision about whether or not to choose COBRA benefits or the alternative. Any person who has recently lost a job may not feel emotionally prepared to deal with finding affordable health coverage. Getting a health insurance comparison from a qualified insurance agent will equip a person to make a judgment about healthcare options.

The need for family medical insurance does not end when the job does. Changing jobs causes a lot of stress. Living without a job creates higher stress levels. High insurance premiums cause even more stress. Fortunately, COBRA alternatives do exist that can save money. A qualified private health insurance agent is the best person to consult for questions about health insurance.