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Is COBRA a reasonable option?

COBRA (Consolidated Omnibus Budget Reconciliation Act) is certainly a great option for the laid-offs and who are between jobs. COBRA assures that you remain covered under the existing group health plan for a period of time when you are looking for a job.  However, there is a cost associated with the benefits. You will be required to bear the entire cost of premium along with the administrative fees charged by the insurer to keep the policy in effect. It can even amount to 102% of the initial premium rate. Hence, no wonder that even when it’s such an advantage many of the laid-off workers don’t opt for the COBRA coverage. You need money to keep the policy active. The studies have revealed that only one out of ten workers opts for the COBRA coverage when 66% of the workers can extend their health coverage with COBRA. .

Why COBRA costs so much?

When you enroll for the group health plan the employer shares the cost of coverage. But with COBRA you have to pay for the entire cost of the coverage. On an average one may have to pay around $4, 000 for an individual for the continuation of the coverage, which many of the unemployed can’t afford.  And, in this current market condition when unemployment is rising at an alarming pace the cost of COBRA coverage would only lead to more Americans without health coverage.

The decision makers seriously need to look into the matter if they can arrange for some assistance for the laid-off workers to help them maintain their health coverage

Individual health plan can be an alternative for COBRA

Often people would opine that individual health plans are expensive than the group health plans, but it can be a good alternative to reduce the cost of health insurance.

You can match the coverage according to your budget. With the individual plan, you may adjust the deductible level from low to high. There are also some insurers who would cover the pre-existing conditions.Hence, it may be the time to look beyond the COBRA coverage to the other available alternatives.