If you lose your job-sponsored coverage, should you go on COBRA or choose a new Affordable Care Act (ACA) plan?
Before the Affordable Care Act (aka Obamacare) became the law, leaving a job meant either getting private health insurance (which was sometimes impossible because of pre-existing conditions), going without health insurance (NOT a good option!), or paying for coverage under COBRA.
COBRA — the Consolidated Omnibus Reconciliation Act — is the federal law that gives you the right to continue your employer-sponsored health insurance coverage for 18 months.
The problem with COBRA, however, has always been that it’s quite expensive.
That’s because with COBRA, you must pay both the employee AND the employer portion of your employer-sponsored health insurance premium, plus an administrative fee.
If you are accustomed to getting health insurance through your employer, you may not realize that the typical employer pays approximately 73% of its employees’ health insurance premium and about 71% of family coverage.
Affordable Care Act (ACA)
The Affordable Care Act makes health insurance more accessible and more affordable than before. COBRA is no longer your only option if you lose your job-sponsored coverage:
- You cannot be denied coverage for pre-existing conditions.
- Depending on your income, you may be eligible for a premium subsidy, making the coverage more affordable.
- Losing your employer-based coverage is a qualifying event which triggers a special enrollment period. You have 60 days from the date your employer-based coverage ends to enroll in a new plan. (Note, under COBRA, you have 63 days to enroll, and must pay premiums retroactively if you enroll anytime after the first day you’re eligible.)
Which is Better: COBRA or ACA Insurance?
As with most questions, the answer depends on your specific circumstances. Consider the following:
Cost
When comparing the cost of COBRA and ACA health plans, remember to consider not only the premiums, but also the out-of-pocket expenses (co-pays, deductibles, etc.) associated with each plan.
Also consider the subsidies available for ACA plans when you purchase coverage on your state’s health insurance marketplace (aka the Exchange). Subsidies are determined based on your income level for the year. Click here to see if you may be eligible.
Timing
If it’s January, meaning you have earned only one month’s salary for the year, a marketplace plan with a subsidy could be a good option. However, if it’s October, meaning you’ve accrued almost a year’s worth of income, you may not be eligible for a subsidy, or may be entitled to a lower subsidy amount.
Also, if you are far into your plan year and have already met your deductible, it may be best to stick with your current plan and go on COBRA.
Keep in mind, expiration of COBRA is also a qualifying event. This means you can enroll in an ACA plan when your COBRA coverage ends. In addition, there is a yearly Open Enrollment period for ACA plans, during which you can enroll in any ACA coverage — with or without a qualifying event.
Your Current Health Status
If you are currently undergoing treatment for a medical condition (for example, cancer or pregnancy), you may be better off choosing COBRA in order to stay with your current doctor and insurer through the course of your treatment. If you have already met your plan’s deductible, it may also be better to go on COBRA.
Note, a pre-existing condition won’t prevent you from enrolling in new coverage, but you still may prefer to stick with your current plan.
Your Age
Because ACA plans can charge higher premiums for older individuals, but employer-based plans usually don’t, older people may fare better with COBRA, whereas younger people will likely find lower premiums in the individual market.
Virginia Medical Plans Can Help
We are available to help you explore your options on the individual health insurance market — both on and off the Exchange.
If you have lost (or will be losing) your employer-based health insurance, give our office a call. But don’t delay because remember, you have 60 days from the date your current coverage ends to enroll in a new ACA plan, or 63 days to elect COBRA.
Reach us by phone at 1-800-867-0800 or email at jkatz@vamedicalplans.com.
Please be patient as we manage a high volume of calls and emails.
