The recent COVID-19 relief bill passed by US Congress and signed into law by President Joe Biden covers 100% of COBRA health insurance premiums. This 100% coverage lasts until September 2021.
What happens after September? You'll once again pay your total premium, the employer portion, and a 2% administration fee.
Uncertainty around job loss isn't only related to lack of income. The United States still operates under an employer-provided health care system. When you lose your job, you lose your health care unless you pay for COBRA.
COBRA insurance is far too expensive for many unemployed workers. So what are some COBRA insurance alternatives?
Read on to learn more about how to stay covered without paying for COBRA health insurance.
The Consolidated Omnibus Budget Reconciliation Act, or COBRA, became law in 1985. This act allowed workers to keep their current health insurance for an extended period post job loss.
Anyone who carried health insurance through their employer and was fired, laid-off, or quit for any reason other than gross misconduct is eligible. Your COBRA coverage lasts for 18 months.
Keeping your insurance through COBRA comes with a huge catch. You're on the hook for your premium plus your former employer's portion.
While keeping consistent coverage is vital to those with pre-existing health conditions or who have children, the price is far too steep for those who remain unemployed for an extended time.
COBRA insurance isn't your only option for health insurance when you experience job loss. Though COBRA gives you the exact coverage you carried, it is simply not an option for too many.
What can you do? You have options to choose from. The one thing you shouldn't do is risk it and go uninsured. Lack of health coverage is a gamble not worth taking, even for a few months.
The Affordable Care Act, also known as Obamacare, is a collection of state-run health insurance marketplaces. These marketplaces allow consumers to shop for insurance plans and compare prices.
Depending on your income, you may also be eligible for a subsidy that covers a portion of your premium. These subsidies are available for those at 100%-400% of the Federal Poverty Line.
During a typical year, ACA Marketplace enrollment begins in November and is open to those who experience job loss. This year, ACA Marketplaces remain opened to anyone due to COVID-19 hardships.
You also have the option of buying into a plan outside of the ACA. You purchase these plans directly from private health insurance companies, and the premiums remain lower than COBRA.
These independent plans do have drawbacks.
High deductible plans exist inside and outside the ACA. These plans are thought of as catastrophic health care. They cover you in case of an emergency and little else.
Because the deductible is so high, you'll pay more out-of-pocket costs for routine health care maintenance. In exchange, you'll pay lower monthly premiums.
High deductible plans are perfect for younger, healthy individuals who use their health insurance less or don't have any pre-existing health issues.
If you're unemployed, you don't plan on being unemployed for long. So why enroll in an ACA or a private plan that covers you for a year?
Are you looking for a health insurance plan with lower premiums than COBRA but with the same flexibility? A short-term health plan could work for you.
They cover you from one month to a little under a year. The best part? You can enroll online, and most become active the day after enrollment.
Short-term insurance operates outside of the ACA. Some plans may not offer the type of comprehensive coverage you received through your employer plan.
Regardless, any of the types of short-term health insurance plans are an affordable bridge to your next employer-sponsored health insurance plan.
Because they're not comprehensive, short-term plan premiums are much lower than ACA plans. You maintain coverage while unemployed without worrying about high monthly payments breaking your budget.
When you enroll in an ACA plan, you have to wait until the first of the upcoming month for your coverage to become active. Short-term insurance coverage starts the day after enrollment.
Did you get another job sooner than you expected? Are you worried that your coverage might overlap or that you'll miss company enrollment because of your short-term health coverage?
Don't worry. You can drop short-term coverage without penalty.
Most short-term plans cover procedures related to illness and injury. This coverage includes emergency room visits, x-rays, hospital stays, and lab work.
Do you need more coverage? With a short-term plan, you're able to opt into additional packages such as prescription coverage.
Individual states are allowed to limit short-term plans. Some states prohibit companies from offering short-term insurance altogether.
If you live in one of the following states, you are cannot purchase short-term health insurance plans. These states restrict your options to ACA qualifying plans.
COBRA health insurance is free until September 2021. It won't be free forever. If you're still unemployed, you'll need another option.
There are many less expensive COBRA insurance alternatives available to keep coverage through a difficult time. If you live in a state that offers it, short-term insurance might be the best option.
Are you unemployed but in need of a COBRA alternative? We can help! Contact us today, and one of our representatives will guide you to the perfect health insurance plan.