Cobra Vs Health Insurance Marketplace Faq

If youve been faced with a job change, it’s important to find the best option to keep your health insurance coverage. Traditionally, the only option has been an expensive one to continue your plan through COBRA.

You may not be familiar with the Health Insurance Marketplace and the plans available, especially as an affordable alternative option to COBRA. Not only are Marketplace plans less expensive than COBRA, 80% of people will usually qualify for financial help from the government to help pay their premium.

How Much Does Cobra Insurance Cost

Les Masterson Ashlee Tilford

COBRA insurance lets you maintain your employer-based health insurance if you lose your job. However, keeping your former job’s health plan is pricey.

COBRA is seen as a safety net during a job loss and not meant as a long-term solution. The idea is to give you a health insurance bridge between jobs.

The COBRA plan works exactly like your employer plan. Its the same health coverage and provider network. The one difference is that COBRA can cost four times more than what you pay in premiums under an employer-based plan.

Key Takeaways

• COBRA insurance provides employees with a temporary continuation of coverage for their health plan if they lose their job.
• The COBRA Continuation Coverage is only available for private sector companies with 20 or more employees, state and local governments.
• When you lose your job that was not your fault you qualify for COBRA health insurance.
• The monthly cost of COBRA insurance depends on what a specific health insurance plan cost.

Things Employees Should Understand About Cobra Coverage

onAugust 9, 2017

Lets be honest. People often dont understand what COBRA coverage is until they need to use it. Even then, individuals struggle to understand the fundamentals. This lack of understanding can have costly consequences. Lets break down the COBRA knowledge barrier with 6 Things Employees Should Understand about COBRA Coverage.

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How Does Cobra Coverage Work

COBRA is a short-term health care insurance thats usually available for up to 18 months after the termination date of your job .

You can get COBRA coverage if you worked for a business that employs 20 people or more. There are exceptions to this, so please call your COBRA administrator to get more information.

With COBRA, you can continue the same health care coverage through the plan you had when you were employed. That may include medical, dental and vision plans. If you choose to sign up for COBRA health care coverage, you wont be able to choose a new plan or change the coverage you had under that plan until the next open enrollment, if your employer offers an open enrollment to active participants. You will be asked to choose and pay for the same health care coverage you had with the plan you were under when you were employed. For example, if you had a medical plan and a dental plan, you can keep one or both of them. But you wouldnt be able to add a vision plan or change certain benefits within your medical plan if it wasnt part of your plan before COBRA.

Types Of Rehab That Cobra May Cover:

Cobra allows you to use your former employer’s health care policy to help pay for treatment expenses. This can include:

Detox: Helps you deal with physical withdrawal symptoms in a safe medically supervised space.

PartialHospitalization Program: Programming to help treat the cause and effects of addiction. At Tree House, this means 5-6 hours of treatment for five days a week, including:

• 1 on 1 counseling

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How Much Does Cobra Insurance Cost A Month

The cost of COBRA depends on how much your former employer spent on health insurance.

One important thing to remember about COBRA coverage — employers usually pay for well more than half of an employer’s health insurance. It’s true that group health plans can cost a lot of money for employees, but employers still pick up more than half of the costs.

COBRA health insurance puts all of the costs on the former employee. You no longer get any help from your previous job.

The average monthly employer-sponsored group plans costs for a family plan are more than $1,600 with employees picking up less than $500 per month on average.

For COBRA, the former employee pays the full amount for health insurance plus an up to 2% adminstrative fee.

Qualifying For Cobra Health Insurance

There are different sets of criteria for different employees and other individuals who may be eligible for COBRA coverage. In addition to meeting these criteria, eligible employees can typically only receive COBRA coverage following particular qualifying events, as discussed below.

Employers with 20 or more full-time-equivalent employees are usually mandated to offer COBRA coverage. The working hours of part-time employees can be clubbed together to create a full-time-equivalent employee, which decides the overall COBRA applicability for the employer. COBRA applies to plans offered by private-sector employers and those sponsored by the majority of local and state governments. Federal employees are covered by a law similar to COBRA.

Additionally, many states have local laws similar to COBRA. These typically apply to health insurers of employers having fewer than 20 employees and can be called mini-COBRA plans.

A COBRA-eligible employee must be enrolled in a company-sponsored group health insurance plan on the day before the qualifying event occurs. The insurance plan must be effective on more than 50% of the employer’s typical business days in the previous calendar year.

The employer must continue to offer its existing employees a health plan for the departing employee to qualify for COBRA. In case of the employer going out of business or the employer no longer offering insurance to existing employees , the departing employee may no longer be eligible for COBRA coverage.

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Death Divorce Or Legal Separation

HHS had originally intended to add a new SEP effective in 2017 for people who lose a dependent or lose dependent status as a result of a death, divorce, or legal separation, even if they didnt lose coverage.

But in May 2016, HHS eliminated the requirement that exchanges add this SEP in 2017. Exchanges have the option to do so, but are not required to offer a SEP triggered by death, divorce, or legal separation. Of course, if the death, divorce, or legal separation results in loss of coverage, the normal SEP rules for loss of coverage would apply.

For example, a person who is covered as a dependent on an employer-sponsored plan would lose access to the plan if the employee were to die. Even if 36 months of COBRA were to be available to that person, he or she would also have access to a SEP in the individual market, triggered by loss of coverage. But on the other hand, an enrollee who loses a family member does not necessarily have access to a SEP at that point, unless one of the other qualifying events applies.

Do I Qualify For Cobra

You may qualify for COBRA coverage if your job or life situation has changed. Here are some of the ways you may qualify:

• You lost your job, either voluntarily or by the decision of your company and you have lost your health coverage
• You had the number of hours per week you work reduced so you no longer get benefits and you have lost your health coverage
• You experience a qualifying event, such as the death of the covered employee, a divorce or legal separation from the covered employee or another event that may entitle you to COBRA coverage.

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Does An Offer Of Cobra Insurance Make Me Ineligible For An Obamacare Subsidy

No. Merely being offered COBRA doesnt affect your ability to qualify for an Obamacare subsidy. But to take advantage of the subsidy, youll have to forgo your COBRA coverage and enroll in an Obamacare plan through the health insurance exchange during your 60-day special enrollment period. Youll also have to meet income and other requirements to qualify for a subsidy.

Note that this is different from an offer of employer-sponsored coverage from your current employer . In that situation, you’re not eligible for a subsidy in the exchangeeven if you reject the employer’s offer of coverageassuming the employer’s offer of coverage is considered affordable and provides minimum value.

If I Lose Or Cancel My Cobra Coverage Can I Still Get An Aca Subsidy

Maybe. Losing or canceling your COBRA doesnt disqualify you from getting an ACA subsidy, but it may impact your eligibility to enroll in an individual market plan. Since you can only use the subsidy with an individual market plan purchased in the exchange, qualifying for the subsidy wont help you at all if youre not eligible to sign up for a plan in your state’s exchange.

If you lose your COBRA health insurance because your COBRA eligibility period of 18-36 months expired , or because the employer-sponsored plan ceased altogether, youre eligible for a 60-day special enrollment period in the individual market . You can enroll in a Marketplace/exchange plan and apply for a subsidy during this special enrollment period.

But if you voluntarily canceled your COBRA coverage or you lost it because you didnt pay your premiums, you wont be eligible for a special enrollment period in the Marketplace or directly through an insurance company.

In that case, youll have to wait until the next open enrollment period to sign up for an ACA-compliant plan. During that open enrollment period, you may also find that you’re eligible for financial assistance in the form of a premium tax credit and/or a cost-sharing subsidy. Note that the American Rescue Plan has made premium subsidies larger and more widely available for 2021 and 2022. So it’s important to double-check your subsidy eligibility, even if you looked in the past and weren’t eligible.

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Plans That Terminate On December 31

If your health plan terminates at the end of the year, you get a special enrollment period that continues for the first 60 days of the new year.

Insurers in numerous states left the exchanges at the end of 2017 or shrank their coverage areas, and the same thing happened at the end of 2016. But that trend began to reverse in 2019, with insurers joining the exchanges in many states. For 2020, we continued to see insurers joining or rejoining the exchanges and expanding their coverage areas. That trend continued for 2021, with insurers joining the marketplace or expanding their coverage areas in at least half the states. And its continuing again for 2022, including some big-name insurers rejoining the marketplaces after exiting several years earlier.

But due to coverage area changes or significant plan design changes, year-end plan terminations may continue to happen for some enrollees in some areas. For example, despite widespread insurer expansions, there are still some areas where insurers terminated their offerings for 2021, including New Mexico Health Connections and Virginia Premier. And for 2022, some enrollees in Washingtons exchange will see plan terminations: Providence is exiting the exchange and Premera is shrinking its coverage area.

436-1566 to discuss your situation with a licensed insurance professional.)

As Millions Of Americans Lose Their Jobs Theyll Need To Look For Coverage

As millions of Americans lose their jobsand with them, their employer-based health insurancetheyll need to look for other coverage.

In the middle of a pandemic, preventing gaps in health insurance coverage is likely top of mind. For some, obtaining health insurance through Cobra, or the Consolidated Omnibus Budget Reconciliation Act, may be an option. If you lost your job and are already on a spouses plan, you probably dont have to take any action. If youre on a Marketplace plan, you may want to check if your change in income affects whether you will qualify for tax credits.

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Affordable Temporary Health Insurance

If you are fairly healthy and still want to remain insured, alternatives to COBRA insurance may be available based on where you live. Short-term health insurance is a popular option and available in most States. This can protect you from high medical costs of new injuries or new illnesses that unexpectedly occur while allowing you to use any licensed doctor. Coverage is available up to $1 million per person. For more information and pricing, you can call us at or complete a free quote online.

Managing A High Cobra Premium

If you’re considering COBRA coverage but you’re concerned about the differences between the cost of insurance coverage through this program and the cost of insurance with the support of an employer, there are a number of important considerations to keep in mind.

When you lose your job, you generally lose your flexible spending account . If a job loss is threatened, you are allowed to spend your entire year’s contribution to the FSA before you become unemployed. If you were going to contribute $1,200 for the year but it’s only January, for example, and you’ve only had $100 withheld from your paycheck for your FSA, you can still spend all of the $1,200 that you were planning to contributesay, by seeing all of your doctors and filling all of your prescriptions immediately.

Upon choosing COBRA, you can change your plan during the employer’s annual open enrollment period and opt for a less expensive plan like a preferred provider organization , or health maintenance organization .

If available, a refundable tax credit called the Health Coverage Tax Credit can be utilized by qualifying individuals to pay up to 72.5% of qualified health insurance premiums, including COBRA continuation coverage. The HCTC program was due to expire on Dec. 31, 2020, but the Internal Revenue Service has extended the program through Dec. 31, 2021.

You can use your health savings account to pay COBRA premiums as well as medical expenses, which could significantly reduce the sting of losing benefits.

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How Much Does Cobra Cost

Most companies pay the majority of their employees health plan premiums, and the rest is deducted from your paycheck. On average, workers contribute 20% of the premium for individual coverage and 30% for family coverage. Under COBRA, youll be responsible for 100% of your premium, so your monthly COBRA payment may be 5 times higher than your payroll deduction.

Although that may seem like a lot of money, COBRA premiums are usually less than youd pay on the open market because youre still benefiting from your companys group discount.

If you have a health savings account , you can pay your COBRA premiums from those funds.

During the next open enrollment period, you may choose to switch to a less expensive plan. Premiums for high-deductible health plans , for instance, are considerably lower than other types of plans for both single and family coverage.

Pros And Cons Of Cobra Coverage

An individual who opts for COBRA coverage is able to continue with the same physician, health plan, and medical network providers. COBRA beneficiaries also retain existing coverage for preexisting conditions and any regular prescription drugs. The plan cost may be lower than other standard plans, and it is better than remaining uninsured as it offers protection against high medical bills to be paid for in case of any sickness.

Nonetheless, it’s important to keep in mind the downsides of COBRA. Some of the most prominent of these include the high cost of insurance when it is borne entirely by the individual, the limited period of coverage under COBRA, and the continued dependency on the employer. If the employer opts to discontinue the coverage, an ex-employee or related beneficiary will no longer have access to COBRA.

If the employer changes the health insurance plan, a COBRA beneficiary will have to accept the changes even if the changed plan doesn’t offer the best fit for the individuals needs. A new plan may change the coverage period and number of available services, for example, and it may increase or lower deductibles and co-payments.

For these reasons, individuals eligible for COBRA coverage should weigh the pros and cons of COBRA against other available individual plans to select the best possible fit.

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Changing From Family Plan To Single Plan

A single plan is simple enough to figure out with COBRA. It gets a bit more complicated if you need to switch from a family plan to a single plan. This can happen if you get divorced or turn 26 and are no longer eligible for coverage on your parents plan.

In instances like these, the HR officer will look up the rate for single coverage on the same health plan you are currently enrolled in. To calculate the COBRA cost, the HR officer will have to determine:

• What you would have been contributing to an individual plan. If you are a family member , your contribution would typically be higher than the employee . In some cases, dependents may be responsible for the entire amount if the employer does not contribute to family coverage.
• What the company would have been contributing toward that premium. If you are the employee , the amount should be clear-cut. If you are the dependent, the contribution can vary depending on the employer.

After adding these two figures together, you would add another 2% to calculate your total COBRA premium costs.

What Is Cobra Continuation Coverage

Large employers in the U.S., those with 50 or more full-time workers, are required to provide health insurance to their qualifying employees by paying a part of insurance premiums. If an employee becomes ineligible to receive an employer’s health insurance benefitswhich can happen for a variety of reasons the employer may stop paying its share of the employee’s insurance premiums. In that case, COBRA allows an employee and their dependents to retain the same insurance coverage for a limited period of time, provided they are willing to pay for it on their own.

As part of the American Rescue Plan Act of 2021, the federal government will pay COBRA insurance premiums for individuals that lost their job as a result of the 2020 economic crisis from April 1 through Sept. 30, 2021.

Under COBRA, former employees, spouses, former spouses, and dependent children must be offered the option of continued health insurance coverage at group rates, which otherwise would be terminated. While these individuals are likely to pay more for health insurance coverage through COBRA than they did as employees , COBRA coverage might be less expensive than an individual insurance plan would be.

It’s important to note that COBRA is a health insurance coverage program and plans may cover costs toward prescription drugs, dental treatments, and vision care. It does not include life insurance and disability insurance.

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