Why Is My COBRA So Expensive?!

Maybe they’ve cut your hours and you're no longer eligible for their health insurance benefits, or maybe you’ve been laid off, or maybe you’re retiring!

No matter what the reason, all you know is that you no longer qualify for your company’s health insurance plan. Now you’re on the COBRA program--and it’s expensive. 

We’re going to reveal why COBRA is so expensive, and what your options are if you’re looking to spend less and still get great health insurance coverage. 

How COBRA Works

So, COBRA stands for Consolidated Omnibus Budget Reconciliation Act. COBRA is an Act that gives employees and their families the right to continue their current employer-based insurance plan in the event that they lose the health benefits they qualify for through the company. 

COBRA eligibility only applies in certain situations to certain workers. For instance, COBRA is only available to you if your existing health plan is covered by COBRA. Your company’s Human Resources department can answer that question.

Also, in order to qualify for COBRA coverage, you need to have experienced what’s termed a “qualifying event”. Qualifying events include situations such as: 

• Involuntary job loss such as a layoff or firing (except for gross misconduct, which makes a person ineligible for COBRA)
• Voluntary job loss such as retirement
• A reduction in work hours that makes a person ineligible for health insurance benefits

And other types of qualifying events. If you qualify for COBRA, you can elect to continue the health care coverage you had before the qualifying event. You’ll have the same plan and the same benefits you had before your change in job status. However, there are a few caveats to the right to continue that coverage under COBRA.

COBRA is Temporary

The first caveat is that COBRA coverage has term limits. Typically, most people can use COBRA benefits for a maximum of 18 months. After you’ve used COBRA for 18 months, you are required to find another health insurance option. 

In some cases, you may be able to continue COBRA coverage for up to 36 months. Those exceptions include scenarios such as if you or a family member is disabled, or if you experience a subsequent/second qualifying event. 

See the Department of Labor’s COBRA page for more information on qualifying for COBRA. Again, just keep in mind that most people are only eligible to receive COBRA benefits for a maximum of 18 months. 

Why COBRA Costs More (Why It’s So Expensive)

COBRA coverage will cost you more money than the insurance plan you had before your qualifying event--even though you carry the same insurance plan. 

This is because, in most cases, your employer was contributing to the payment of your insurance plan’s monthly premium. After your qualifying event, your employer no longer contributes to the payment of your monthly insurance plan premium.

This means you are left to pay the entire monthly premium out of your own pocket--and that can be very expensive. 

Luckily, you don’t have to use COBRA coverage to ensure you have good health insurance for yourself and/or your family. You do have other options.   

What Are Some Alternatives to COBRA?

• Government ACA (Affordable Care Act) Plans

As you likely know, the Affordable Care Act provides health insurance plans for citizens through the federal government. If you are within the Open Enrollment Period for the ACA (typically the beginning of November through mid-December) you can see the ACA website page for plan information. 

The ACA also allows for Special Enrollment access to their health care plans in some situations. Typically, if you’ve experienced a job layoff or other qualifying event, you may be able to purchase an ACA health care plan during a Special Enrollment Period. 

The government ACA program has a variety of available plans for you to choose from. Just be sure to read the fine print before purchasing, as some ACA plans can be quite costly. 

• Or Private Health Insurance Plans

We strongly encourage that you also take a look at private health insurance plans as an alternative to COBRA. Private health insurance plans offer a large variety of health insurance options with a wide selection of coverage options--and cost options. 

With private health insurance plans, you can customize the type of coverage you have based on your medical needs, budget and more. 

For instance, maybe you just want a short-term health insurance plan that carries you over until you find different employment or until you reach the open enrollment period. 

Or, you may want a high-deductible plan to minimize premium costs. Maybe you just want to go with the cheapest health insurance you can find. 

You and your family members have individual health needs and wants. You have doctors, clinics and hospitals you prefer. 

There may be medical conditions you need to have covered. Private health insurance plans are so vast that you can find one to cover just about any health insurance preference or need you may have. 

However, because your options are so vast, you’ll want help in finding the right health insurance plan for you. Don’t try to wade through the hundreds of health insurance options you have on your own. Get help from independent, experienced health insurance professionals that can help you find the best plan for your situation. 

Summary

Whether you want to continue COBRA coverage, look at ACA plans or seek out a private health insurance plan, we can show you which health insurance options best fit your wants and needs. 

Contact our expert team at AZ Health Insurance Brokers by calling us today at (602)617-4107 to get more information about which COBRA alternatives are available to you.