When you leave your job, you typically have the option of continuing your employer-sponsored health coverage or signing up for an individual policy. Here we offer some tips to help you decide what coverage is best for you. Make sure you pay close attention to the enrollment deadlines. You cannot purchase coverage until the next Open Enrollment period if you miss them.
COBRA Continuation Coverage
COBRA continuation coverage (established by the Consolidated Omnibus Budget Reconciliation Act of 1985) allows you to keep your employer health coverage for eighteen months after you leave employment. If you choose COBRA coverage, you will pay the full cost of your premiums plus a 2% administrative fee. Your employer will send you instructions on how to sign up for coverage. You have 63 days to enroll in COBRA coverage from the date your employer-sponsored coverage ends.
Who Might Benefit from Choosing COBRA Coverage?
Consumers who want plans with richer benefits, consumers in the middle of treatment, and older consumers may benefit from COBRA coverage.
- COBRA coverage often has richer benefits and lower deductibles than individual coverage, which can make it a good value for the cost of the premiums. If you want or need the most comprehensive coverage available, you may want to consider maintaining your employer-sponsored coverage.
- If you are currently undergoing medical treatment, you may find it easier, cheaper, and less stressful to keep the same doctors and continue the cost sharing under your current plan.
- COBRA coverage costs the same regardless of your age. However, insurers increase the cost of individual policies as you get older. If you are older, COBRA coverage may be a better overall value for you than an individual policy.
Individual Health Coverage
Losing your employment-sponsored health coverage triggers a Special Enrollment Period. This means you can shop for an individual policy through an agent, directly from the health insurer, or though the federal health insurance Marketplace. You have 60 days to enroll in individual coverage after your employer-sponsored health coverage ends (45 C.F.R. 155.420).
Who Might Benefit from Choosing an Individual Plan?
Younger, healthier, and lower income consumers may benefit from choosing an individual plan.
- COBRA coverage costs the same regardless of your age. However, insurers increase the cost of individual policies as you get older. If you are young, an individual policy may be much more cost effective than COBRA coverage.
- COBRA coverage can be very expensive and may have benefits you do not want or need if you are healthy. If you do not utilize health care services very often and want to reduce your premium costs, you may want to consider a more economical individual plan over COBRA coverage.
- If you qualify for federal health insurance subsidies, you must purchase an individual plan through the federal health insurance Marketplace to use them.
Remember: Regardless of your age or situation, it never hurts to shop around and consider all of your options before you purchase a plan.