Since its passing in the Reagan-era, COBRA insurance has been an important option for people and their families facing life situations that would otherwise mean a loss of health insurance. Whether you’ve lost a loved one who was the primary beneficiary for your family or simply lost a job during hard economic times, COBRA gave people options and a window of time to transition to new insurance companies. Now, the Affordable Care Act gives you even more options to choose from.
COBRA:
COBRA allows qualified beneficiaries the opportunity to keep their same health insurance plans temporarily due to the loss of a job, death of a spouse or parent, or a divorce. When you lose a job, you and the other qualified beneficiaries in your family are allowed 18 months of continued coverage through your same health insurance plans. If your primary beneficiary died or you’ve gone through a divorce, you are eligible for up to 36 months of care.
The problem with COBRA is that the previous employer no longer assumes any of the costs of your health insurance premium. Instead, you assume the full costs of the premium, and typically you also assume a 2% administrative fee on top of the premium. This can be particularly expensive, given that many people who need to use COBRA are also going through a loss of income in the family. However, the benefit of COBRA is that it allows you to keep the exact same coverage and the same providers. This gives you flexibility and avoids the hassle of finding new providers and figuring out the more complicated options associated with the Marketplace.
Marketplace:
The Affordable Care Act is changing the game surrounding health insurance in general, but it also changes the options for people dealing with the loss of a job or a loved one. Through the Marketplace, you choose how extensive you want your plan to be, and you have options to reduce the amount you’re paying for health insurance. COBRA does not allow you to choose how much you pay; you pay what your employer was paying before, plus a little more. Going through the marketplace also allows you to apply for healthcare subsidies if your income falls below a specific range.
The major downside to the Marketplace when COBRA is another option is that you may get a cheaper option, but it may be less extensive. Every Marketplace plan has to have to cover the 10 essential health benefits outlined by the Affordable Care Act, but it still leaves a lot that may not be covered. Going through the Marketplace may also mean changing providers and going through all of the hassle associated with doing so.
Both COBRA and the Marketplace provide people with options when sudden life-changing events happen, but they both have drawbacks. Both will cost you money, so make sure you compare premium prices and the amount of coverage you’ll receive for the price you pay.
