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Will I Be Able to Afford COBRA?

Learn how to determine if you and your family can afford COBRA care.

Will I Be Able to Afford COBRA?

For many people, job loss, retirement, or quitting brings about countless stressful financial questions as one considers their life and budget without employment. Knowing how important it is to ensure that you and your family have adequate medical insurance, many people find themselves asking, "Will I be able to afford COBRA insurance? For most, COBRA insurance is the easiest option because it allows you to continue the exact same coverage, however as they learn exactly how much COBRA will cost, they begin to wonder if they can really afford it. Luckily, there are many alternative options for people who find out they can not afford COBRA coverage. Use the following guidance to help determine if you can afford COBRA insurance.

  1. Understand the Cost of COBRA: The first thing you have to understand to know whether or not you can afford COBRA is the actual monthly cost. The monthly cost of COBRA will be included in your COBRA election form provided by your employer. If you are unable to find the cost in the election form, you can calculate it yourself by multiplying your current monthly premium (both what you and your employer pay) which is located on your pay stub and multiplying that by 1.02, or 102%, which is the monthly cost of COBRA insurance.
  2. Determine if the COST of COBRA Works in Your Budget: Now, you need to calculate in that cost with your monthly budget. Likely you may be creating a monthly budget for the first time so you will want to consider all major expenses (rent/mortgage, utilities, car payments, insurance, groceries, etc.) and figure out if you can in fact afford COBRA. Many people find out that they can not.
  3. Understand the costs of alternatives: Use the charts below to understand the potential differences in price for common alternatives to COBRA insurance.
    Individual Family
    COBRA $600 $1,084
    Individual or Family Health Insurance $231 $420
    Catastrophic Insurance $100 $180
    Short Term Health Insurance $120 $216
    High Deductible Health Insurance $51 $92
    Based on a healthy individual or family in 2010. The plan you choose will likely vary from this based on age, gender, health status, location, as well as chosen co-payments, deductibles, etc.
  4. Learn more about alternatives to COBRA insurance: There are many options for health insurance other than COBRA and it is important to understand thoroughly what each one is and who it is best suited for. You can find detailed information about COBRA alternatives here. It is also smart to get quotes from different companies to better understand the specific costs for you. Once you have this information, you can determine what insurance suits you and your family and whether COBRA is the best option.
  5. Explore State Sponsored Programs: Depending on your income, you or your children may qualify for state sponsored health insurance, Medicare, low income health insurance, and other programs that offer significantly less expensive insurance to people who find themselves in a difficult financial situation. To learn more about these programs, visit your state insurance agency website.


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