Steve, a 50-something attorney with a Fortune 500 company, found himself leaving the business world after many years to strike out on his own. He didn't know where his path might lead, but with a few pre existing conditions on record, as well as a dependent daughter, he had one question in mind: “What is the most affordable, comprehensive healthcare plan for my family that maintains our current level of coverage?”
As he spent time researching, all roads seemed to lead to COBRA. COBRA sounded like a great opportunity to avoid a coverage gap, and in such a confusing marketplace, it seemed like the best option. Like many others, Steve did not have a clear picture of what enrolling in COBRA entailed, or other options available to him and his family.
So what is COBRA exactly?
COBRA, or the Consolidated Omnibus Reconciliation Act, is a temporary coverage option provided to individuals and their families who are no longer eligible for a Group Healthcare plan. This happens after a Qualifying Event—in other words, any reason that caused you to leave your previous job, with the exception of termination due to gross misconduct.
COBRA may also be presented as an option if you turn a certain age, qualifying for Medicare, or are no longer eligible as a dependent. Also, if you find yourself no longer covered under the group healthcare plan of your spouse due to death, divorce or legal separation, you are eligible for COBRA.
The bottom line: COBRA comes at a high cost.
COBRA may sound like a hassle-free option that provides the same coverage and the same doctors as your previous plan. The truth is that COBRA is usually more expensive to you than your Group Healthcare Plan was simply because your employer typically has been paying for part of the costs. Once you elect for coverage under COBRA, the full amount of that cost can be charged to you as an individual. You can be billed for up to 102% of the total cost of coverage; 100% of the cost of your previous plan plus a 2% administrative fee.
So why COBRA...ever?
Reasons you should consider electing COBRA are:
• You’ve already spent your deductible or max out of pocket for the year and expect to continue receiving care. In this scenario, paying a little more for the COBRA premiums will probably keep your cost of care down versus starting a new deductible.
• You take a prescription that is only available on your group plan and there’s no alternative your doctor can prescribe. This is a very rare scenario.
• You regularly see a specialist who accepts your group plan, and subsequently will accept COBRA, but does not accept any individual plans available.
The good news: You have options!
Instead of finding out too late that COBRA falls short, find a healthcare plan that fits you and your families’ individual needs. This is where Take Command Health comes in!
Take Command Health can help you explore the 3 options besides COBRA:
1. Individual Medical Plans – There are two different types of individual medical plans; On-Exchange or Off-Exchange. On-Exchange plans are found on Healthcare.gov and are eligible for tax-credits and subsidies. Off-exchange plans are not on Healthcare.gov and are not eligible for tax-credits or subsidies. However, the cost of these plans is often comparable, and an off-exchange plan can include larger doctor networks and more features.
2. Short-Term Plans – Affordable plans that can provide great coverage for specific incidents such as accidents or illness, but don't cover routine care or pre-existing conditions. These are not qualified plans in the eyes of the government, so the longest you can use a short-term plan without incurring penalties is three months. This is a good option if you find yourself in need of a new plan around the end of the calendar year and can save you money while waiting for open enrollment (Nov. 1- Dec. 15).
3. Faith-based plans – These plans act like insurance for people that testify and live to a Christian lifestyle. They are exempt from the healthcare laws (meaning you won’t get a tax penalty), are often more affordable, and you can enroll year round. Make sure to check out our blog on faith-based plans and compare at TakeCommandHealth.com to see if it’s right for you.
Why Take Command Health?
Take Command Health believes in transparency and empowerment in this confusing realm of health insurance. We use data to provide unbiased information for on- and off-market plans as well as faith-based plans. We want to empower you to make smart decisions and avoid wasting money on the wrong plan. It doesn’t hurt that it takes five minutes and it’s free!