5 Money Saving Alternatives to COBRA Health Insurance
There’s no denying the fact that COBRA insurance can be expensive. These alternatives to COBRA provide similar coverage at a fraction of the price. Call us today for all your cobra health insurance questions and alternative options!
With over 27 million Americans on the verge of losing health insurance, it’s a great idea to understand the process of what comes next. Since health coverage may literally save your life, you need to know where to get it.
COBRA health insurance is a mandatory plan offered by your employer. People will seek these more affordable alternatives to COBRA due to the high cost.
What Is COBRA?
COBRA stands for the Consolidated Omnibus Budget Reconciliation Act. This law mandates that an employer offer prolonged health coverage if you quit or get terminated.
The protection of the law also carries over to spouses who carry the insurance for the entire family. In some cases, COBRA is extended to former spouses who lose insurance after a divorce.
Did you work for a business that provided health insurance and employs more than 20 full-time workers? If the answer is “yes”, then you are most likely eligible to receive COBRA.
Small businesses that employ less than 20 full-time workers, religious organizations, and federal government agencies do not have to provide COBRA.
While you or your spouse’s former employer may have paid 100% of the health insurance premiums, you will be required to pay all of the COBRA premiums. A former workplace has no obligation to help pay for COBRA unless agreed to before separation.
Additionally, the cost of COBRA is actually more expensive than your original healthcare plan. The extended coverage costs an extra 2% on top as an administration fee.
Depending on the situation, the extended coverage of COBRA can be purchased for anywhere between 18 months and three years. If an employee is fired for anything worse than gross misconduct, then they will not be eligible.
Deadlines of COBRA
There are some key deadlines that both you and your former employer must meet to ensure coverage is compliant.
- Within 14 days of separation, an employer must send you a notification of your COBRA rights
- If you elect extended coverage, you have 45 days to pay your first premium
- A person has 60 days from the initial notification to accept or decline COBRA
While the federal mandate penalty has been removed from the law, you will need to check with each individual state about penalties.
The Best Alternatives to COBRA
All the rules and regulations of COBRA will force anyone to seek alternatives. These are the best five alternatives for anyone needing a health plan.
1. Short-Term Health Plans
Do you have another job lined up? If you are going to have a small gap in health insurance, then consider a short-term health plan.
You don’t have to enroll during any specific windows, and coverage is approved in a matter of seconds. The short-term health plan usually kicks in the day after approval.
It’s important to remember some of the downfalls of short-term health coverage. While it is cheaper than COBRA, a person can be denied for preexisting health conditions. The length of coverage usually doesn’t extend past one year.
2. Health Sharing Coverage
A health sharing plan consists of members who collectively pool their money to help pay medical bills. This coverage is best for people who only need catastrophic protection.
Are you expecting a baby soon? Did you get into a serious accident? Serious life-altering events need adequate health protection. If you have a big surgery, accident, or pregnancy, then health sharing is a great plan.
When a member gets a medical bill, they can submit it to the medical sharing plan company to get all or part of the expenses covered.
The obstacles with health sharing coverage include the possible denial of reimbursement for a medical bill. Some of the policies have restrictions based on age and benchmarks. A person might also have to agree to religious statements to qualify.
3. Marketplace Coverage
Don’t settle for COBRA when you can shop the exchange for health coverage. You can find health insurance plans with similar protections and a wide range of prices. Even the higher end plans are usually cheaper than COBRA.
Depending on your salary range and income bracket, you may qualify for government aid to help pay the monthly premiums.
4. Combining Policies
Making the transition from employment to unemployment leaves a lot to the unknown. Mixing alternatives to COBRA can help you customize a solution for your medical needs.
Medical sharing plans or a marketplace exchange plan can take weeks to be approved and start covering you and your family. In the meantime, you can use a short-term health plan to cover the gap.
You can also decide to go with the COBRA coverage until an alternative is approved. Mixing with the COBRA plan will require some budgeting on your part to help cover a month or two of premiums.
Another option is to mix three different plans together. Make sure you keep the different dates, qualifications, and restrictions organized and separate.
As a person jumps from one plan to another in a short time, a simple medical bill that was covered by two of the plans may be denied by the third option. A customized Neopolitan of health plans should meet your needs.
5. No Health Insurance at All
Since there is no federal mandate, a person can elect to have no health insurance at all. Instead of spending thousands of dollars a year on a health plan alternative, a person could use that money to pay for other essentials.
People who exercise regularly, eat a well-balanced diet, and avoid dangerous situations aren’t usually the people who need health insurance.
However, not having health insurance can be a financial mistake if you get in a car accident or other medical emergency. This isn’t the preferred choice, but it’s a relief to know you won’t be forced to buy a health insurance plan.
Knowing the Options
COBRA health plans may be a perfect choice for some people. For those on tighter budgets, alternatives to COBRA can help a person ferry across the land of unemployment.
If you are in need of a health insurance plan that fits you, then contact us today.