Cobra Coverage Too Expensive?

By Kandi Mensing:

Are you on COBRA and it is too expensive? Were you offered COBRA and had to decline coverage because you couldn't afford the premiums? Have you ever lost access to your employer's health plan? It could have been because of a layoff, a termination, or reduction in hours. If you have ever seen the cost of COBRA coverage, you know that it is expensive!! Most individuals and families cannot afford to pay for COBRA.

Just to briefly explain for those that don't what COBRA is, COBRA stands for Consolidated Omnibus Budget Reconciliation Act. It is a Federal law that was enacted in 1986 mandating that employer's allow employees (or ex-employees) that were formerly eligible to join the employer's group health plan access to the group's health plan, even though they're no longer 'eligible,' where coverage would have otherwise been cancelled. The legislation allows that the employer charge the (ex)employee full premium cost plus a 2% administrative fee. This can be very costly.

If you lose group coverage, what are your options?

1. Pay the expensive premiums for group healthcare 
2. Go without healthcare coverage, letting your policy lapse
3. Elect coverage on your new employer's health plan
   (If they offer healthcare, and if you're lucky enough to find another position immediately)
4. OR, purchase your own affordable individual health plan

At Mensing Consulting Solutions, we help people get off of COBRA (or avoid having to elect COBRA) by helping them shop for affordable individual health plans. We find them coverage they can afford without the markups of group healthcare. The last time my family was eligible for COBRA, our family plan through the group coverage was $1,100 per month. Add on a 2% administrative charge and we were looking at about $1,122 per month. Instead, we were able to purchase our family plan under an individually written plan (not group) for less than $400 per month! So, as you can see, there is  a sizable difference between what is paid for coverage under an individually written plan versus a group plan. We saved over $700 each month by purchasing our individual plan instead of electing COBRA coverage.

Group health plans are simply more expensive than plans written on an individual level (i.e. not group). Why is COBRA so expensive, you ask? Well, when you purchase COBRA, you're likely paying a 2% surcharge on the employer's group health plan (the only COBRA fee allowed by the government). Group health plans are accessible by the employer's eligible employees. Group health plans are guaranteed issue, meaning that eligible employees cannot be declined for coverage under the group health plan regardless of pre-existing conditions, lapse of healthcare coverage, or any other reason.  Group health plans do not afford employees the ability to customize their coverage. Some employers may offer several plans for employees to choose from, but not all employers.

When you purchase your own individual plan, you can choose the plan design that fits for you and/or your family at the price that you can afford! 

We work with many large carriers and are very competitive in the market. When you work with us, we don't just write your plan. We're there for you even through your claims process, for any support or assistance that you might need. We are a family business supporting families and other family owned businesses.