Understanding COBRA Insurance: Costs, Coverage, and Alternatives

The Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985 provides a way for former employees to maintain their health insurance benefits temporarily after leaving a job. However, the cost of COBRA insurance can be substantially higher than what employees were paying while working. COBRA coverage can last up to 18 months if you quit or lose your job, up to 29 months if you become disabled, and up to 36 months in certain other situations.

When considering COBRA insurance, individuals should be aware of the potential costs involved. Employees are responsible for the entire cost of their coverage, plus an administrative fee, as their employer is no longer required to contribute. Premiums for COBRA insurance can be significantly higher than what individuals were paying while employed, with an average of $145 per month for individual plans and $548 per month for family plans in 2023.

Alternatives to COBRA insurance include Marketplace plans, joining a spouse’s workplace plan, Medicaid, short-term health insurance, and government programs like CHIP. Marketplace plans tend to be more affordable than COBRA coverage, with an average cost of $477 per month and potential tax subsidies available. It’s important to compare the costs and coverage options of these alternatives before making a decision.

Overall, individuals leaving their jobs and facing the loss of employee health insurance should carefully consider their options for maintaining coverage to ensure they have access to necessary healthcare services.