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What do I do if I can not pay my COBRA Insurance monthly premium?

Posted on: April 18th, 2011 by Cobra Insurance Guide

Question KeyUnfortunately due to the current economic climate, not to mention recently losing a job, many people find themselves in a position that they may not be able to pay the full monthly premium under to continue their COBRA insurance health care.  Normally, under the current laws, if you do not pay the premium within the 30 day grace period, you will lose your COBRA insurance coverage and not be eligible to sign back up for it again.  However, there are some things you can do if you find yourself in this situation.

  1. Reach out to the health insurance provider: There is a chance that your health insurance provider under COBRA insurance will work with you to determine a payment schedule that you can keep up with.  Many companies are sympathetic to your situation and want to help you continue to keep your coverage.   It can not hurt to reach out so do not hesitate to reach out to find out your options.
  2. Consider Paying on Credit: It is extremely important to keep your health insurance, so you may want to consider paying your premium with a credit card.  You do not want to find yourself in a situation with major medical expenses and this can be a way to make sure this doesn’t happen while you seek out new employment and insurance.
  3. Consider COBRA Insurance Alternatives: Rather than just going without health insurance, you may be able to find a cheaper COBRA medical insurance alternative by exploring alternatives.  There are many different types of medical insurance options and many are significantly cheaper than COBRA insurance.

 

How Much Does COBRA Insurance Cost? Three Examples

Posted on: April 3rd, 2011 by Cobra Insurance Guide

How Much Does COBRA Insurance Cost?  Three ExamplesThe cost of COBRA insurance is based on your current health insurance premium, both your cost and the cost your company subsidizes or pays, plus a 2% administration fee under the COBRA insurance federal law.  For many people this will be substantially more than they are used to pay since most employers pay for anywhere between 40%-100% of health insurance costs depending on the company.  So what does it really cost, let’s look at three examples.

Example 1:  Single Man, PPO, COBRA Monthly Cost:  $501.27

Henry P. was a single man laid off from his job as a medical sales man.  Henry had a PPO health insurance plan for himself.  His monthly cost while working was 30% of the premium which was $115.60.  He found that amount by looking at his most recent payment stub.  His employer covered 70% of the cost of his health insurance plan, which was $385.67.  Therefore his total medical insurance cost was $501.27 per month.  Under COBRA he would be responsible for the entire amount plus a 2% administration cost, so under COBRA insurance his total monthly premium would be $511.29.

Example 2:  Family of 4, HMO, COBRA Monthly Cost, $1452.48

Luisa B. recently quit her job as a marketing executive and her HMO health insurance plan was covering her and her 3 children.  Under the plan at her former employer, she paid 50% of the health insurance premium which amounted to $712.  Her employer subsidized the other 50% of the cost, also $712, making her total health insurance cost $1424.  She will be responsible under COBRA to pay that amount plus the 2% COBRA insurance administration cost, which amounts to $1452.48 per month to continue to maintain her health insurance under COBRA for her family.  Luisa did not elect to sign up for COBRA until the end of the 60 day window, which means her first payment she will have to pay for both months retroactively, amounting to an initial payment of $2904.96, and then $1452.48 for the length of her COBRA health insurance coverage.

Example 3: Married Couple, Small Company, State Sponsored COBRA Cost: $669.05

Sarah M. worked at a small internet company with only 12 employees, meaning she was not eligible for federal COBRA insurance continuation.  However, Sarah M. was lucky enough to work in a state that offers a mini-COBRA plan that she can elect for her husband and herself.  Under the state’s COBRA plan, Sarah M. is responsible for the entire premium for her premium health plan plus a 11% administration fee.  Under her former plan, Sarah was responsible for 25% ($120.55) of the health insurance cost and her employer covered the other 75%. (482.20).  This means her total cost under COBRA insurance will be the entire premium covered by her and her employer ($602.75) plus the 11% administration fee charged by her state ($66.30) which amounts to a COBRA insurance premium cost of $669.05.

Could Henry, Luisa, and Sarah Saved Money by Looking At Other Health Insurance Options? Yes!

Many people simply believe that COBRA insurance is the best option because they have heard there is no way they can get coverage that is as good through a private company.  That is simply not true for most people.  Given that group health insurance plans at employers cover both healthy and (many) unhealthy people, the rates are generally much higher than what a generally healthy person could get on their own.  In fact, most people find that they can save over 65% by using a private plan.

Want to find out if you can save money and still get great coverage?  Get a quote using the form below.  It is free, only take a few minutes, and there is absolutely no obligation to sign up for anything.  Instead it will give you multiple options for insuring yourself or your family, likely at a huge savings.

Minimizing COBRA Costs for Short Term Unemployment

Posted on: April 2nd, 2011 by Cobra Insurance Guide

Minimizing COBRA Costs for Short Term UnemploymentAre you going to immediately begin looking for new employment after losing your job or quitting your job?  If so, signing up for COBRA insurance immediately may not be the best option for you.  Under the current COBRA legislation you have 60 days or 2 months to determine if you would like to elect COBRA insurance coverage.  Then, if you decide to continue your medical insurance under COBRA, your health insurance will be retroactive back to the day you lost your job.  So what does this mean for you?  This means two critical things that could dramatically reduce your costs within those first 60 days.

First, this means that if you do find employment before the end of the 60 day term and will have health insurance start before a lapse in coverage begins, you can avoid paying for two months under COBRA which could cost you up to $1000/month.  If you do not, no harm is done and you can sign up at the end of the 60 day election window for COBRA and continue your insurance.

Secondly, this means that if you are planning to wait until the end of the window to elect COBRA medical insurance coverage in hopes that you will find a job, and end up needing medical care before the new insurance counts, as long as you elect COBRA and pay the COBRA premiums before the election window ends, you will be covered for those medical expenses.  COBRA insurance is retroactive in that way so anything that happens within the 60 days regardless of whether or not you have yet to elect COBRA will be covered as long as you complete the election form and pay the premiums for the two months.

Therefore, if you are fairly certain that you will find employment or need extra time to determine your next medical insurance option, you do not need to worry about any medical costs that arise in the 60 d ay window because you can always decide to elect coverage.  As long as you have enough money to pay the retroactive premiums (2 months) your expenses will be covered by the insurer.

 

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