Alternative to COBRA

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PostPosted: Fri Apr 17, 2009 1:21 pm   Post subject: Alternative to COBRA  

I'm really scared of getting laid-off. It would then be real tough task for me to pay for COBRA. Any suggestions?


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Barbwire
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PostPosted: Fri Apr 17, 2009 2:05 pm   Post subject:   

The World is going through a very difficult time.It is very tough and costly affair to pay full premium after job loss.I have heard that some employer may voluntarily help to cover the cost of COBRA insurance and include entire coverage amount in exit package.

The stimulus package just passed for laid-off people to receive subsidy of 65% of Health Insurance Premium for up to nine months.Although it is very good decision taken so far and make insurance premium little bit affordable for unemployed.But its a question of debate that will it feasible? What shall we do after nine months or year after that?Getting a new job is very crucial to meet expenses or else insurance premium may wipe out all savings.

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PostPosted: Sat Apr 18, 2009 10:35 pm   Post subject: A cheap short term policy could work  

A short term health policy will offer some coverage, it's more for major costs and not for someone with existing medical conditions. Also if you develop a serious problem while under a short term health policy you might not be able to find coverage elsewhere when it expires. They are alot cheaper than cobra, I've seen some as low as $20 a month. But again they are for catastrophic care. You can usually get them to run for up to a year, hopefully things will be getting back on track by then.

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PostPosted: Mon Apr 20, 2009 5:45 pm   Post subject:   

You likely won't find a better deal than the Govt subsidy paying 65% of your cost. If that's still too expensive for you, find a local in state independent broker that can shop all of the carriers for you.



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PostPosted: Tue Apr 21, 2009 9:23 am   Post subject:   

I have seen people avoid being on COBRA since the cost of it doesn't justify its benefits. IMO steps should have been taken earlier to protect people against the extraordinary rates of COBRA coverage. It wasn't administered and implemented properly and therefore has lost its effectiveness overtime.



My question to you Mip, do you think that COBRA is an imperfect system that actually has kept many people away from health coverage?



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Rupert

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PostPosted: Tue Apr 21, 2009 12:44 pm   Post subject:   

Hi Barbwire,



See..a lay-off doesn't necessitate a loss in your health coverage. On the



other hand, a lay-off could give you an option to switch to another plan.



You might even consider plans with your former employer. In that case,



you'd just need to call up your former HR. Again, that's just one out of



many options!



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PostPosted: Wed Apr 22, 2009 12:13 am   Post subject:   

Quote:
My question to you Mip, do you think that COBRA is an imperfect system that actually has kept many people away from health coverage?





Well Cobra certainly isn't perfect and before the new subsidy I rarely advised my clients to take it unless they were uninsurable and unable to buy their own indiv plan. I personally like and recommend indiv plans over group. Unfortunately, underwriting is not kind to many and cobra may be their only option. Now with the govt paying 65% of the cost, it's typically the most affordable option, especially when people have lost their income.


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PostPosted: Wed Apr 22, 2009 6:58 am   Post subject:   

Hey Mip,



Quote:
I personally like and recommend indiv plans over group.




I'm sure that you have reasons for that.



Quote:
Now with the govt paying 65% of the cost, it's typically the most affordable option, especially when people have lost their income.




Surely, sooner or later the government is going get itself freed from this burden. I wonder what would become of the people then. I sincerely feel that if no steps are taken towards improving the system now, many are again going to skip this wonderful provision in the future. What do you say?
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PostPosted: Wed Apr 22, 2009 1:48 pm   Post subject:   

Hi Barb..



Have you considered any limited benefit plan?



With these mini-meds you'd be entitled to receive maximum benefits. They'd cover you for hospitalization and generic drugs.



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PostPosted: Wed Apr 22, 2009 7:46 pm   Post subject:   

Quote:
I have seen people avoid being on COBRA since the cost of it doesn't justify its benefits. IMO steps should have been taken earlier to protect people against the extraordinary rates of COBRA coverage. It wasn't administered and implemented properly and therefore has lost its effectiveness overtime.



My question to you Mip, do you think that COBRA is an imperfect system that actually has kept many people away from health coverage?



Thanks,

Rupert




Can you please explain further why you think that the cost of COBRA isn't justified by its benefits?



COBRA is actually a bargain. I'm not saying that it's inexpensive. COBRA is nothing more than the participant being able to continue their health insurance AT THE SAME COST that was being paid before they left their employment. The reality is that COBRA should be more expensive. The reason for this is that healthy individuals buy individual coverage instead of going on COBRA. Therefore, COBRA is mostly unhealthy people.



If COBRA isn't justified by its benefits don't we have to say that all health insurance isn't justified by its benefits?
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PostPosted: Thu Apr 23, 2009 7:17 am   Post subject:   

Quote:
Can you please explain further why you think that the cost of COBRA isn't justified by its benefits?




Why then only 9% of the enrollees actually take up the program at the time of need?



I think that it is the cost of the program that makes it unaffordable to many. Further, COBRA doesn't guarantee that you would find proper health coverage after staying on COBRA for eighteen months, rather it would eat-up all your saving by that time.
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PostPosted: Thu Apr 23, 2009 10:01 am   Post subject:   

Kelvin, I have no idea if your 9% figure is correct, but I'm willing to assume that it is. Why would only 9% go on COBRA?



Let's look at what the other 91% do:

1) Get added to their spouses plan

2) Purchase individual coverage

3) Get coverage through their new job

4) Go without coverage



Group health insurance is expensive. The issue isn't that COBRA is expensive. The issue is that group health insurance is expensive and when one goes on COBRA, they are paying group rates.



Therefore, the only people who historically have gone on COBRA are people who can't get coverage elsewhere and can afford the COBRA rates.



COBRA is full of unhealthy people.



Let me give you an example. You work for ABC Company. ABC company has a group health insurance plan in place. The insurance for you is $250/month. ABC company pays $150/month, so you only pay $100. You quit your job. COBRA allows you to continue with the insurance. Since you no longer work at ABC, they won't pick up any of the cost, so you will now pay $250/month.



Would you continue on COBRA? Yes, but only if you could afford the premium and couldn't find less expensive coverage elsewhere. Under what conditions, would this happen? Most likely it means that you have a health issue.



That is why that I say that COBRA is a bargain. People only go on COBRA if it is the best value for them. COBRA is full of people with health problems.

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PostPosted: Thu Apr 23, 2009 11:38 am   Post subject:   

I’m not very well off with the ways the health insurance industry works. So, if I take your comment to the face value then enrolling for COBRA justifies only if you have serious health issues and can’t find coverage elsewhere. Healthy people should stay away from it or find cheaper alternative.



But my experience states that people get enrolled with the group plans since they can’t afford or find proper health plans in the market. And its also true with the healthy people which means that it isn’t easy to secure coverage in the private market even when you have no health issues.

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PostPosted: Thu Apr 23, 2009 12:16 pm   Post subject:   

People get involved with group plans because the employer usually picks up a portion of the cost which makes this their best option for coverage since it minimizes their out of pocket premium.



That is correct that healthy people should stay away from Cobra.

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PostPosted: Thu Apr 23, 2009 3:27 pm   Post subject:   

Hi, if you have chances to go jobless it's always better to carry a public program. Though your access to primary care physicians would be restricted, it's still better to carry 'something' than 'nothing'. Please keep an eye on your delayed rationing due to less provider reimbursement.



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