What is COBRA?
COBRA stands for “Consolidated Omnibus Budget Reconciliation Act.” If you’re wondering what to do when COBRA runs out, you probably already know what this type of coverage is all about. Here’s a brief refresher:
COBRA is geared towards American workers and their family members who lose their health benefits. This type of coverage gives them temporary coverage under their previous group plan for a limited amount of time. This gives them the opportunity to figure out their next steps. While workers and their families are covered by COBRA, they have enough “breathing space” to continue working and consider alternative options for health coverage.
COBRA itself is not a type of insurance, but rather a set of laws that force group health plans to offer a temporary extension of coverage to employees and their families if they lose their benefits. This is also known as “continuation coverage.” COBRA has specific guidelines on how these employees may choose continuation coverage, as well as regulations for employers. These regulations may involve a requirement to provide employers with notice ahead of time.
Only employers with 20 or more full-time equivalent employees are required to offer COBRA coverage. Employees and their families might enjoy continuation coverage for various lengths of time, ranging from 18 to 38 months. In addition, individuals may be required to pay the entire premium for coverage up to 102% of the cost of the plan. In other words, employees are required to pay the entire cost of their health insurance, when previously their employers covered a portion of healthcare premiums. This obviously means that COBRA should only be viewed as a temporary measure that gives employees enough time to look for insurance alternatives.
COBRA became especially well-known and common during the pandemic and subsequent economic crisis, as many people lost their jobs or suffered a significant change in hours, benefits, income, or a combination of all three. This resulted in the government creating a “special enrollment period” on the federal health insurance exchange, giving employees an opportunity to explore alternative options instead of expensive COBRA coverage. In addition, the American Rescue Plan Act (ARPA) provided total coverage for many COBRA recipients from April 2021 to October 2021.
Why might you need COBRA?
COBRA might help if you find yourself in a number of situations, including:
- You were laid off
- You started working fewer hours per week and have become ineligible for health insurance benefits under your employer
- You retired
- You quit your job
In addition, you may become eligible for COBRA if you are a dependent of a COBRA recipient. For example, your spouse may be receiving COBRA. Even if your spouse is receiving COBRA coverage and they divorce you, you can still qualify for the same coverage. In addition, you may be eligible for this type of coverage if your spouse dies while receiving COBRA benefits.
You are eligible for COBRA benefits even if you were enrolled in a group health insurance plan through your employer just a single day before your qualifying event. This qualifying event must result in you losing your health insurance coverage through your employer. It is worth mentioning that a qualifying event may include voluntary or involuntary job loss. This means that whether you quit your job or were fired, you’re still covered under COBRA. The only exception is if you were fired for “gross misconduct,” such as causing a major accident at the workplace or engaging in workplace harassment.
So why might you even want coverage under COBRA? The most obvious reason is that it gives you all of the health insurance benefits that you previously enjoyed under your employer. In other words, nothing changes. This makes continuing with your healthcare needs very simple, as you don’t need to make any adjustments. If you were to choose new insurance after losing your employment coverage, you might have to change your doctor or eliminate certain specialist care, such as visiting your chiropractor. In addition, you’d have to go through the entire process of searching for new insurance coverage, which can be time-consuming. Finally, you would need to check whether your existing doctors are within the provider network of your new insurance company.
Of course, you will need to do all of this eventually regardless, because COBRA is temporary. The benefit of COBRA is that it gives you a little bit of breathing room while you continue with work and assess your options. When you’ve done your research and you’re ready to get started with a new insurance plan, you can do so at your own pace.
While COBRA is more expensive than what you were previously paying under your employer’s coverage, it still might be cheaper than an individual health insurance plan. Do the math and figure out the most beneficial choice for you. It may make sense to stay on COBRA for as long as possible to reduce overall costs.
Choosing new health insurance
When COBRA coverage ends, you can choose new health insurance. Of course, you don’t actually need to wait until your COBRA runs out. Instead, you could elect to choose different health care coverage from the moment you lose your benefits. As long as you choose new health insurance that kicks in within the 60-day notice period, you won’t have any gaps in your coverage.
Even though remaining on COBRA might seem like the best choice, you should start searching for alternatives as soon as possible. This is because your COBRA may be terminated early. For example, your employer could stop maintaining its group health plan for all employees – including those who are covered normally. If the health plan is abandoned, there is no way to continue receiving COBRA. You may also lose access to COBRA if you fail to pay your premiums on time.
So what should you do when COBRA runs out?
Your first step should be to determine whether you’re eligible for public assistance programs such as Medicaid, CHIP, or the Veterans’ Association. This might be an especially crucial step if you have lost access to employer benefits due to retirement or disability.
If you’re not eligible for these plans, you’ll need to consider your options for low-cost health plans. You could choose to purchase an individual plan from a broker or insurance carrier through the regulated federal Health Insurance Marketplace. HealthCare.gov might be a good starting point as you compare costs, details, and benefits. However, you might quickly learn that individual health plans can be prohibitively expensive – especially if you're used to paying lower premiums with assistance from your employer.
This can prove to be quite a shock, and those who are on fixed incomes might be wondering how they can possibly afford these plans. Most Americans are currently living paycheck to paycheck, and the rising cost of living means that even a few hundred dollars of extra expenses each month can spell financial ruin for families.
Choosing the best coverage afterward
Fortunately, there are alternatives available. One of the most obvious options is something called CrowdHealth. This isn’t “insurance” at all – but rather a crowdfunding platform.
The principles are basically the same:
You still pay monthly fees just like an insurance plan. You also receive coverage for medical expenses.
The process is actually very simple as well, and it simply involves paying your medical bills, uploading your receipt to the CrowdHealth app, and submitting a crowdfunding request from other members.
From there, CrowdHealth will facilitate the crowdfunding process, allowing you to receive coverage for your medical expenses in a more affordable manner compared to traditional health insurance.
Not only is CrowdHealth more affordable than traditional insurance, but it also offers a range of additional benefits. For example, you no longer need to worry about provider networks if you choose CrowdHealth.
CrowdHealth also offers unlimited virtual health and unlimited talk therapy. Furthermore, you can enjoy discounted prescriptions when you choose this crowdfunding option – plus personal care advocacy.
CrowdHealth will even negotiate with health providers on your behalf, helping you lower your bills and your financial obligations each month.
Crowd Health could be your way forward.
For this reason, you might consider choosing CrowdHealth right from the beginning after losing your employment benefits instead of receiving COBRA coverage. Do the math and figure out what the most affordable and effective option might be based on your unique circumstances.
CrowdHealth can offer a range of options for those who are dealing with COBRA.
First of all, CrowdHealth can serve as a viable alternative to COBRA immediately after you lose your employment benefits.
You can also choose CrowdHealth after COBRA runs out, giving you an extended form of temporary health care coverage while you continue to look for a suitable plan. This might be an especially effective option if you are set to retire in a few years. For example, your company might stop offering health benefits – but you might be planning to retire in three years anyway. COBRA might get you 18 months of coverage, while CrowdHealth could step in once COBRA runs out. From there, you would only need to wait 18 months until you retire and apply for Medicare or Medicaid.
Finally, you might choose to stay with CrowdHealth indefinitely after COBRA runs out. You might find that this alternative crowdfunding system is more effective than traditional health insurance. CrowdHealth can easily serve as a permanent health care solution.
Is there an alternative plan?
There are many alternatives to COBRA, and you can explore these options either during the 60-day notice period or after COBRA ends.
You could always choose Medicare Part A or B, and you may have the opportunity to take advantage of an 8-month special enrollment period to sign up. One thing you need to keep in mind is that if you skip this special enrollment period and choose COBRA, you might need to pay a Part B late enrollment penalty at a later date. This may also result in a gap in coverage.
Of course, you don’t have to worry about this if you choose an alternative such as CrowdHealth.
You might also choose to switch to your spouse’s insurance instead of enrolling in COBRA. However, your spouse’s plan may be geared toward their unique medical needs, and you may experience a general lack of coverage for the things you need.
Take COBRA with a grain of salt, because its benefits can be very misleading. Even though you might experience the exact same coverage that you experienced through your employer’s group health plan, you will be paying much more.
The main thing you need to remember about COBRA is that this is not intended to be a long-term solution. Don’t make the mistake of thinking that COBRA will provide the same benefits as a normal insurance plan, because it may run out faster than you realize.
Another important consideration is the expensive nature of COBRA. This type of coverage can cost you upwards of $1,000 per month. This can prove to be a real drag – especially if you’ve been laid off and have no income. For this reason alone, it makes sense to consider alternatives like CrowdHealth.
CrowdHealth has pricing that starts at just $175 per month – a far cry from the prohibitive cost of COBRA.
If you’d like to learn more about how CrowdHealth works and why it might be a solid alternative to COBRA, our team members will be happy to answer any questions you might have. Check out CrowdHealth today.
Talk to a CrowdHealth Specialist
People Love CrowdHealth
Dr. Maryanna Barrett, MD
Owner of Thrive OBGYN
Dr. Tanya Stewart, MD, MBA
Former Chief Clinical Transformation Officer, United Health Group
Dr. Maryanna Barrett, MD
Owner of Thrive OBGYN
ON
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