This week it’s Mission Health Insurance in my life. I’ve got to navigate this before my current job ends so this week, it’s the Week O Insurance at Breaking Even. More posts about this fascinating topic in the coming days!
Since I didn’t commit a felony and since my company has more then 20 employees (among a few other reasons), I qualify for COBRA, which stands for Consolidated Omnibus Budget Reconciliation Act.
Passed in the 1980s, it requires that employees can elect to keep their health coverage…if they pay 102% of the cost of the plan. (The extra 2% is administrative costs, apparently.)
So while you may have some money for health insurance taken out of your check, your employer likely kicks part of it in too. With COBRA they don’t do this anymore. I get why, I mean, it’s kind of like paying part of your ex’s rent after you break up.
At first glance, why the heck would anyone do this? COBRA, while expensive compared to a high deductible policy, is cheaper then it would cost for an individual to buy the same health insurance coverage. It’s kind of like picking a mid-priced wine. Probably a safe bet but you pay more for that safety.
Today, I got the official amount I’d have to pay each month to COBRA my insurance. I already knew ball park what it was going to be; that was the figure I used for health insurance when I calculated whether I could afford to quit my job and go into business full time. It will cost me about $350 a month to maintain my current coverage (!).
I have to decide within 14 days of finishing work whether I will COBRA or not (I can wait up to 45 days but then other financial penalties can come into play after 14 days). I can keep the coverage for up to 18 months after my job ends.
Clearly I am still gathering some information. Meanwhile, I’d love to know if you’ve ever COBRAed your insurance and whether you found it worthwhile!
More information on COBRA (via the government)
More information of COBRA (via eHow…better formatting)
Read related post “Week O Insurance: Real Benefits”…
Read related post “Week O Insurance: Health Insurance Co-ops”…
Don’t skimp on the insurance! I would do the COBRA option until you have your own health coverage. All it takes is one appendicitis attack to set you back years! Yes, spending the money for the insurance is a bit of gamble, but to me, the peace of mind is worth it.
I am in the same boat. Do the COBRA. $350 is peanuts for insurance. My advice … don’t look at this moment. Look ahead half a year and ask whether you’re going to wish you had done it when you had the chance. I agree with Christina..it’s worth paying for the peace of mind!
Maybe this is different because you quit instead of being laid off. But the stimulus package has a provision that has the federal government paying for 65% of COBRA. Again, maybe because you quit that makes you ineligible.
Check into the local chamber of commerce. Maybe you can get a better deal through there. And aren’t you the type of person that Dirigo is supposed to benefit?
Hmm Carl, good idea on the Chamber.
Actually Dirigo is not accepting new enrollments, indefinitely. Yeah so of the four insurance providers we have in Maine, one is not even a possibility. Ugh!
Probably the most important reason to sign up for COBRA (painful as the costs might be) is to avoid the pre-existing condition clause of most commercial insurances. If you are without insurance for >90 days, your new insurance can and will deny, well, pretty much anything. The COBRA counts as continuing insurance, so you will avoid this.
I got on COBRA when I got too old to be on my parents insurance (23) anymore and I didn’t have a job that offered health insurance. It was less expensive than $350 but not by much.
It actually came out to be even with the amount it would have cost me to take my prescribed medications had I not had health insurance so it made perfect sense. Walmart wasn’t offering it’s $4 medicine plan back then either. Drugs are expensive…
I like your comparison of COBRA to mid-priced wine. It’s good that you’re doing research to be able to decide whether or not you’ll pursue getting COBRA, at least this way you have a say on your health care unlike others who just chose it because they didn’t know anything else.
That cobra rate sounds great to me–when I left NYC I found out my cobra insurance was around $850 per month! Thankfully I only needed it until student insurance kicked in, but I was shocked it was so high!