If you lose your current group health insurance, you may have several options for getting coverage, including COBRA continuation, a spouse’s plan or a Marketplace plan. If you go without coverage, not only will you have to pay all your medical bills out of pocket, but you may also be subject to a fee for not having health coverage.
COBRA vs. the Insurance Marketplace
For most people, the two main choices will be between COBRA coverage and a Marketplace plan. Here’s some important information to keep in mind when weighing your options.
After a loss of job-based group health insurance due to voluntary or involuntary job loss, reduction in hours worked, transition between jobs, death, divorce and other life events, you may have the right to continue your group health coverage for a certain period of time. The Consolidated Omnibus Budget Reconciliation Act (COBRA) gives you this option, and most COBRA coverage lasts up to 18 months.
With COBRA, you are usually responsible for the full price of coverage (your employer may pay a large portion of the premiums for non-COBRA coverage), plus up to a 2% administrative charge, meaning you will be responsible for up to 102% of the cost of your health plan if you elect COBRA coverage.
The benefits of COBRA are that you are able to keep the same plan, ensuring you can keep your doctor, and you will not have to start over with a new deductible as you would with another plan. However, these advantages come with a premium that usually increases drastically under COBRA continuation.
The Insurance Marketplace
If you lose your current group health insurance, your main choices are likely getting coverage through COBRA continuation or a Marketplace plan.
When you experience a qualifying life event, such as losing group health coverage due to a job loss, you can choose to purchase health insurance through the Marketplace. With a qualifying life event, such as losing your job-based coverage, you are eligible to enroll even if it is outside the Marketplace’s open enrollment period; the special enrollment period triggered by this qualifying life event will end 60 days after the loss of other health coverage.
With a Marketplace plan, you may have lower monthly premiums as well as lower out-of-pocket medical costs. Depending on several factors, such as income and household size, you could qualify for tax credit subsidies, which can greatly decrease the amount you pay for premiums. If you’re losing your group health insurance due to job loss, your loss of income may help you qualify for lower premium rates due to these available subsidies.
Applying for insurance on the Marketplace will also let you know if you qualify for free or low-cost coverage through Medicaid or the Children’s Health Insurance Program (CHIP).
Enrolling in Coverage
Although losing your job-based group health insurance is likely a stressful event, you don’t have unlimited time to make an educated decision and enroll in a new plan. For either choice, you typically have 60 days from the triggering event. Here are the basics about enrolling in COBRA and the Marketplace.
Your employer will provide you with a COBRA Continuation Coverage Election Notice and information on how to elect to continue your health insurance through COBRA. Typically, you will have at least 60 days from either the date you lose coverage or the date that you are provided with the election notice—whichever is later—in order to enroll in COBRA.
The Insurance Marketplace
Becoming eligible for COBRA will qualify you for a special enrollment period for the Marketplace. To enroll, visit www.healthcare.gov or call 1-800-318-2596 to get started.
If you have already chosen COBRA but wish to switch to a Marketplace plan, you either have to do so during an open enrollment period or you must wait for your COBRA continuation coverage to expire, in which case you would again be eligible to enroll in a plan on the Marketplace.
Voluntarily dropping COBRA coverage does not qualify you for a special enrollment period. If you’re ending your COBRA coverage early outside of the open enrollment period, you cannot enroll in a Marketplace plan at all, with or without lower costs. In this situation, you would generally have to wait until the next open enrollment period begins in order to enroll in a Marketplace plan.
For further information or assistance in choosing the right health coverage option, you can contact Mark III Employee Benefits at 800-532-1044.