COBRA Insurance Just Isn’t Worth The Cost

On June 1st of 2010, the decision was made to end the COBRA subsidy, which effectively increased the health insurance payments of all unemployed individuals by 65%.  This news, while unfortunate, was just another article I had written.   However, a recent development has shown me first hand, just how unaffordable COBRA health insurance is for unemployed persons.

Earlier in 2010, my girlfriend was let go from her job and now her health insurance runs out at the end of the month.  Should she want to continue her coverage, the cost is a few pennies shy of $450 a month.  Had the subsidy still been in place, the cost would have been south of $200.  While at her job, she didn’t have to pay a dime for health insurance so up until last week, this was an absolute blessing.  But now, as she begins unemployment filings and the new job search, that number is just ridiculously high to try and pay.

When you consider just how much of a person’s salary that is, realize that with unemployment, the average take home amount is just over $1,000.  With rent (or a mortgage) and COBRA insurance, most people would already be out of money and we haven’t even talked about the other necessities in life like food and utilities.

Reading the plights of others online soon made me realize that the $450 price tag is actually quite low compared with what others are paying.  In some cases, workers are asked for payments of more than $750 a month on their health insurance and that’s with a $3,000 deductible.  So with 21 days left and counting, we’re doing our best to get her checked out for anything and everything.  We’ve got appointments lined up day in and day out and God-willing, we can close the month knowing there’s nothing wrong and hold out for a bit until a new job (and a new three-month waiting period) is acquired.

But that may not be an option for everyone.  Even though we’re working off of a bad situation, we’ve had a few lucky breaks.  The lay-off at the beginning of the month has given us time to take care of a few things that others cannot.   And having this health-care has already allowed for a few check-ups and tests so with her being in her 20’s and in good health, the risk of not having health insurance is low.  Certainly not a risk I prefer taking but considering the situation, a necessary one.

The primary alternative we now have is to find a health care plan for her on our own, and even though we’ve already decided on the no health care option, I still visited eHealthInsurance.com to see what kind of plans were available.  We’ve reviewed their site in the past and actually found a fair amount of plans that were priced at 60% of what the COBRA payments would be.  Different providers offered different coverage amounts, copays and deductibles and if we were in dyer need of a health plan, that is certainly the place we would pick it up.

Considering the high price that needs to be paid for COBRA insurance after losing a job, I just can’t see the value in paying it, rather than finding a discount health plan in it’s place.  I’m sure there are unique circumstances and previous health conditions that make finding a new policy just as, if not more difficult and costly but for us, the only option is not to pay.

Published or Updated: September 17, 2011

Comments

  1. JessicaPS says:

    For those who have been laid off, can’t afford COBRA and are struggling to find free or low-cost healthcare services, there are many tips and strategies you may not be aware of. Plus there are various government and community programs. I would suggest downloading a book called The Healthcare Survival Guide at http://www.healthcaresurvivalguide.com. This book contains tips to save money, information on free or low-cost services and more. The book is currently being offered for free as a download from the publisher’s website but it can also be found on Borders.com and Amazon.com for $6.95 if you want a hard copy. To view the book, you need Adobe Acrobat Reader on your computer, and must register with the website. But it’s worth it.

  2. jim says:

    COBRA cost is the amount that the employer actually pays for the insurance. Just goes to show you how much our health insurance benefits actually cost.

    One time where COBRA makes sense is if you have pre-existing conditions or if you have other high medical costs that you know your insurance will pay.

    Shopping around for individual insurance that provides less and costs less can certainly make good sense for most people compared to paying the full cost of their employers group plan.

  3. Ginger says:

    I wish I could have avoided COBRA but during my last months of school I was aged out of my mom’s plan and because two years prior my neck was hurt I was unable to get a private plan, even a high deductible plan. This meant I had to spend over $500/month because if I did not and ever need treatments on my neck, the insurance company could say “that is a preexisting condition.” and not cover it. I paid it and gladly, to cover me for future costs. I agree get the best deal you can, but budget (in your EF) for COBRA, it may be your only choice.

  4. reinkefj says:

    Having been unemployed five time in my career, I always took COBRA. My spouse has chronic health problems. Coverage to avoid having something labeled “pre-existing” is CRITCIAL. You must have that.

    If one has no assets and no income, I presume you can get Medicaid. If you have huge medical bill, bankruptcy is an option.

    It’s really a “political problem” that ties health insurance to employment. Blame FDR and WW2 wage and price controls that allowed companies to avoid the wage caps while still attracting talent. Blame LBJ and Medicare that took over health insurance for the over-65 population which causes the spiraling cost of medicine. Blame the State monopoly on “insurance regulation” for why you can’t buy it across state lines, like life insurance, or it sizes or ways that you need (i.e., one size fits all — like covering hair plugs or breast exams). Argh!

  5. Sam says:

    this was a very well thought out and intuitive blog post on the subject of Cobra Health Insurance.

  6. Henry says:

    I couldn’t agree more since I signed up for COBRA thinking it was my only option given I have a preexisting condition but my bill was over $1200 a month! Since I couldn’t afford that I ended up finding out about PCIP insurance on http://www.cobrainsurancedirect.com/Cost-of-COBRA.php and was able to save 50% off the cost.

  7. Henry says:

    I couldn’t agree more since I signed up for COBRA thinking it was my only option given I have a preexisting condition but my bill was over $1200 a month! Since I couldn’t afford that I ended up finding out about PCIP insurance on http://www.cobrainsurancedirect.com/Cost-of-COBRA.php and was able to save 50% off the cost.

Speak Your Mind

*