When you lose a job, it can be tough to focus on complex decisions about health insurance. But experts say the Affordable Care Act may provider a cheaper alternative to COBRA coverage – and people need to make that decision before they say yes to COBRA.
“It might benefit someone to go directly to the (HealthCare.gov) exchange for coverage instead of taking COBRA, which could keep them out of the exchange until the next open enrollment,” said Cathy Graham of The Employers Association, a Charlotte HR consulting firm. “I don’t think this is a big topic of conversation and may even be an unknown to employers and individuals losing coverage.”
COBRA (it’s short for the Consolidated Omnibus Budget Reconciliation Act of 1985) was created to give former workers temporary access to their group plan. For up to 18 months they can continue the coverage at roughly the old premium, but the employer contribution goes away.
That generally brings sticker shock. In 2013, North Carolina employees paid an average of $1,064 a year for single-person coverage, but the full premium averaged $5,218, according to a recent Commonwealth Fund report. For family coverage, the employee paid an average of $4,685 on a premium of about $15,000.
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In other words, you might end up paying three to five times the amount that was taken out of your paycheck. Depending on family income, the ACA exchange may offer better options.
Here’s where it gets tricky: As part of a severance package, retirement or transition to disability, the employer may offer to continue the contribution for a month or more before shifting the full cost to the individual. But anyone who accepts will be locked into COBRA until they can enroll for the next calendar year.
The other option is to reject the COBRA offer and file for special enrollment based on the loss of workplace coverage.
The subsidy, if any, will be based on family income for the current calendar year, which can be tough to estimate in the upheaval of a layoff or medical crisis.
At the risk of sounding like a broken record: It’s smart to get help with something this complex. In North Carolina, call 855-733-3711 or visit www.gcaconnector.org to make a free appointment. In South Carolina, call 888-998-4646 or visit www.signupsc.com.