> COBRA is the single largest expense for departing employees.
Life pro tip: Do not use COBRA!!!!! It is almost always much, much cheaper to find an ACA compliant healthcare plan on your state's health insurance market. For one thing the plans will often be cheaper (though with fewer features). For another ACA plans qualify for tax credits, etc and COBRA doesn't.
When I got laid off I made one of the worst financial mistakes of my life keeping my employer's high-deductible plan via COBRA. I stupidly figured it had to somehow still work out to be cheaper than shopping for private insurance. Boy was I wrong! Between the "high deductible" part and the fact the plan wasn't able to qualify for tax credits I overpaid my medical expenses by about $10,000 over the course of a year. Had I gone with even a "bronze" level ACA compliant plan that would have been cash in my pocket that would have helped out a lot while I was looking for work.
The big reason was my medication was like $800/mo. And on my employer's plan once I hit my $3500 deductible it went to $0/mo. This wasn't a problem when my former employer picked up most of the insurance premium for my high deductible plan but with COBRA you are paying the entire premium! And for my use case, medication was my top medical expense so I was paying a hefty premium for a fancy health plan that didn't actually cover my expenses.
A "regular deductible" ACA plan would have made much more sense in my unemployed scenario as the premium was not only lower but the medication was generic and would have only been like a $23 copay!
Always, always bust out Excel and compare the full cost of healthcare on different plans. Compute the total cost of your medications, how & when you'll hit things like your deductible, what tax credits & deductions apply, etc. What made rational financial sense while employed might not make sense when unemployed or buying your own health plan. But you have to find out for yourself. Rarely does it make sense to continue paying your employers health plan via COBRA. After loosing your job you have like a 30 day window to switch plans before you will be locked into your COBRA plan for the remainder of the year -- do not dilly dally around, figure it out now!
Forget ACA compliant health plans. When I was laid off, since my income / week was $0 (Oregon), we just got medicaid for my kids, and pregnant wife, and I paid an extremely modest amount for a solid plan. There is no reason to use COBRA. It's a relic and probably should be done away with.
> It's a relic and probably should be done away with.
This is the conclusion I came away with as well. It made sense back before there was the public health insurance marketplace.
...but I tell you what there was nobody out there who told me "hey, revisit your health insurance" and it cost me a non-trivial amount of real money to learn that lesson!
Please look at your individual situation and don't take this suggestion blindly. If you've already contributed significantly to your deductible or out-of-pocket maximum it can definitely make sense to continue with COBRA.
Also you can game the COBRA enrollment window. You have 60 days from your loss of coverage to elect COBRA and once you elect COBRA you have another 45 days to submit payment. You can elect on the 59th/60th day and then pay 45 days later if you ended up needing the coverage. If you don't need the coverage don't pay.
> Please look at your individual situation and don't take this suggestion blindly.
Exactly. The message here is it is incredibly important to re-evaluate your healthcare plan. Every household is going to be different! Bust out excel and crunch the numbers.
Please check though, because my kids qualified for medicaid despite my six-figure income. The state of Oregon qualifies by week, so even if you made $10 million / year, if your expected income in the week is $0, you qualify for that week (yes, I literally asked them this question, and he said yes, that is how it works). According to our DHS, there is no upper limit on yearly income that would mandate a clawback of benefits received[1] . And in Oregon at least, OHP is accepted everywhere, and is usually better than the platinum plans (no payments taken from users, ever)
[1] As another example, I asked if I didn't work Jan - Nov, and then made $10 million in December, would my kids qualify for mediacid Jan - Nov, and he said yes.
That is interesting to know, and does seem to be true if that $10 million is the lottery and is truly random income and is truly instantaneous. If you are working on a company that you sell, it may not be the case.
that is not what I was told. I bluntly pointed out that I expected to make good money that year despite being laid off (and I did), and he said it did not matter, since I was unemployed, my expectation for the current week was zero. It has nothing to do with whether you have a lotto ticket or a company exit.
Although obviously if you're working at your company, you are not unemployed and do not have zero income expectation.
Life pro tip: Do not use COBRA!!!!! It is almost always much, much cheaper to find an ACA compliant healthcare plan on your state's health insurance market. For one thing the plans will often be cheaper (though with fewer features). For another ACA plans qualify for tax credits, etc and COBRA doesn't.
When I got laid off I made one of the worst financial mistakes of my life keeping my employer's high-deductible plan via COBRA. I stupidly figured it had to somehow still work out to be cheaper than shopping for private insurance. Boy was I wrong! Between the "high deductible" part and the fact the plan wasn't able to qualify for tax credits I overpaid my medical expenses by about $10,000 over the course of a year. Had I gone with even a "bronze" level ACA compliant plan that would have been cash in my pocket that would have helped out a lot while I was looking for work.
The big reason was my medication was like $800/mo. And on my employer's plan once I hit my $3500 deductible it went to $0/mo. This wasn't a problem when my former employer picked up most of the insurance premium for my high deductible plan but with COBRA you are paying the entire premium! And for my use case, medication was my top medical expense so I was paying a hefty premium for a fancy health plan that didn't actually cover my expenses.
A "regular deductible" ACA plan would have made much more sense in my unemployed scenario as the premium was not only lower but the medication was generic and would have only been like a $23 copay!
Always, always bust out Excel and compare the full cost of healthcare on different plans. Compute the total cost of your medications, how & when you'll hit things like your deductible, what tax credits & deductions apply, etc. What made rational financial sense while employed might not make sense when unemployed or buying your own health plan. But you have to find out for yourself. Rarely does it make sense to continue paying your employers health plan via COBRA. After loosing your job you have like a 30 day window to switch plans before you will be locked into your COBRA plan for the remainder of the year -- do not dilly dally around, figure it out now!