Five Reasons to Drop Your COBRA Coverage

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There are a number of reasons why you might elect not to take COBRA continuation coverage, or elect to drop COBRA in exchange for a private health plan offered through the healthcare marketplace.

#1: High premiums

COBRA premiums can be expensive. Under COBRA you will pay the full price of the plan, plus a small administrative fee, up to 102% of the cost of the plan. This can be prohibitively expensive for someone who has just lost their job. Furthermore, federal cost-sharing subsidies are not available to assist with the cost of continuing coverage through your COBRA rights. An individual plan may offer a better monthly cost due to qualification for a federal cost-sharing subsidy.

#2: Provider network

Some plans have closed networks. When your employer chooses their medical plan they must choose a plan that fits their budget and the needs of the majority of their employees. This means that many group plans have a closed network (HMO plans) or a limited network (many POS and PPO plans). When you shop for individual coverage you can choose a plan that has the doctors you want.

#3: Generic group plan

The generic group plan is just that–a plan designed to accommodate a large group. Extra benefits and services might drive up the cost of your premiums. An individual plan purchased through a healthcare marketplace may be more suited to your particular needs and circumstances. You will also be able to pick a plan that better suits your financial situation, one with a lower premium, for example.

#4: Pre-existing conditions

The Affordable Care Act made it illegal for health insurance companies to refuse healthcare to anyone because of a pre-existing condition. Being sick cannot keep you from getting health insurance. You do not need to keep your expensive COBRA coverage to prevent a coverage gap, nor do you need to worry that you might be turned down, or charged more, because of a pre-existing medical condition.

#5: Qualify for help

When you apply for healthcare through the marketplace, you can find out if you qualify for help paying for your plan. You may qualify for lower costs on monthly premiums or lower out-of-pocket expenses. You may also qualify for Medicaid or your dependents may qualify for the Children’s Health Insurance Program (CHIP). Electing COBRA coverage means you have no access to these extra benefits.

If you find yourself qualifying for COBRA coverage, it is in your best interest to look closely at your options. The best one may be to choose an individual plan.  RedQuote works with both employers and beneficiaries to help people decide if a marketplace plan is the right fit.  If you want to learn more or need help selecting a new plan , don’t hesitate to contact us!

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Published Jul 25, 2016.