The cost of COBRA can vary depending on where you live.
For some people, COBRA can be a very expensive form of health insurance.
Illustration by Julie Bang for Verywell Health
What Is COBRA?
Illustration by Julie Bang for Verywell Health
you could usually keep your coverage for between 18 to 36 months.
But one of the biggest disadvantages of COBRA is how much it costs.
Making Your Decision
If you are leaving a job that’s subject to COBRA rules (i.e.
You will then have 60 days to decide whether to take COBRA or not.
COBRA and COVID
The COVID-19 national emergency extended the COBRA timeframe temporarily.
During your COBRA election window, you could compare prices on thehealth insurance Marketplace (exchange).
you’re free to still change your mind and decide not to use COBRA.
That said, switching to a new plan is not always the best option.
As with most things related to health insurance, there is no right or wrong answer.
Whether COBRA is the best choice for you depends on your needs and circumstances.
Can I Afford COBRA?
For some people, the cost of COBRA is just too expensive.
If family members are added, the employer still picks up around 73% of the total cost.
This makes coverage fairly affordable for most active employees and their families.
The exception would be if an employer offers a COBRA subsidy as part of a severance package.
Then, check your pay stub to see how much you’re contributing.
After adding these figures, add another 2% (for the service fee).
This will show you exactly how much youll expect to pay for COBRA.
For example, say that you have $125 taken from each paycheck for health insurance.
You get paid twice per month, so your portion of the monthly premiums is $250.
This will depend on whether your state has established rules for state continuation of health insurance.
These deductions make your net income smaller and, by doing so, lower your income tax.
When you lose job-based health coverage and switch to COBRA, you have to pay your COBRA premiums withafter-taxmoney.
That means that you lose the tax-free benefit you got while being employed.
Its best to work with an accountant or tax advisor to find out for sure.
COBRA Alternatives
The individual/family health insurance market is an alternative to COBRA.
Before theAffordable Care Act(ACA), it excludedpre-existing conditions.
With the ACA, you could gethealth Marketplace/exchangecoverage regardless of your medical history.
COBRA gives you the option to continue that plan for at least 18 months.
However, COBRA can be costly.
COBRA insurance can also affect your income taxes.
Switching to an individual/family plan on or off the Marketplace can mean you face higher out-of-pocket costs.
You also may need to change providers.
But it’s never your only option.
And you’ll likely find that you’re eligible for subsidies to offset the cost.
Be sure to compare both options before making your decision.
Need Help?
The Department of Labor oversees COBRA compliance.
They have a list offrequently asked questions about COBRA, which may be useful to you.
you’ve got the option to also speak with someone at the agency by calling 866-487-2365.
Department of Labor.Health plans & benefits: continuation of health coverage - COBRA.
Department of Labor.FAQs on COBRA continuation health coverage for employers and advisers.
Kaiser Family Foundation.2022 employer health benefits survey.
Kutak Rock Attorneys at Law.What Happens Once the COVID-19 National Emergency Ends in May?
Norris L. healthinsurance.org.Involuntary loss of coverage is a qualifying life event.
Healthcare.gov.Qualifying life event (QLE).
Norris, L. healthinsurance.org.A change in subsidy eligibility may allow you to enroll or switch plans.
Centers for Medicare and Medicaid Services.Effectuated Enrollment: Early 2023 Snapshot and Full Year 2022 Average.
