If you want to keep your health plan through COBRA, you must leave your job through a “qualifying event.” This can include leaving your job for any reason other than gross misconduct or a reduction in the number of hours you work. Note that you must have been covered by the plan on the day before the qualifying event that caused you to lose your health care plan. The length of time you’re covered will depend on when the event took place. If your job was terminated or your hours were cut, you can be covered for up to 18 months. If your job ended or your hours were cut, and you became eligible for Medicare 18 months before the event, COBRA coverage lasts up to 36 months after the date you became eligible for Medicare. In most cases, COBRA has a high cost because you have to pay the full premium. You must pay for the portion your employer paid on your behalf when you had your job. You may also pay up to 2% for administrative fees. As of the 2019 plan year, the Shared Responsibility Payment of the Affordable Care Act (ACA) was canceled. This means you don’t have to pay a tax penalty for not having health insurance if you choose to forgo COBRA or other options. If you cannot afford health insurance through COBRA but want and need a health care plan, there are other health plan options besides COBRA that may work for you. These plans are cheaper than some of the other options to COBRA, and for a reason. For instance, you can be denied if you have a pre-existing condition. You should also be aware that this option may not cover certain vital health issues such as maternity care or mental health care. Short-term health plans are only offered for between one month to just under one year. The length of time will depend on the state where you live. What’s more, the policy may impose a lifetime or annual dollar limit on coverage. It is not meant to be a long-term fix. You may even be able to get financial help from the government that could reduce or get rid of the cost of your ACA plan premiums. In all states, your income has to be between 100% and 400% of the federal poverty line for you to qualify for a tax credit towards your health care premium. The American Rescue Plan aims to help more people use this option for 2021 and 2022. People with incomes between 100% and 400% of the federal poverty line are getting more help. Those with incomes above 400% of the poverty level will not have to pay more than 8.5% of their household income toward a benchmark plan or a cheaper one. A benchmark plan is the second most-expensive silver plan in your area’s Marketplace. You can state your need for help with your premium when you apply for a health plan during the ACA open enrollment window. You can also apply and get help to pay for it during a special enrollment window if you have what is known as a qualifying life event. For example, losing your job counts as such an event. Independent health care plans can be purchased from private insurers outside of the ACA Marketplace. These plans don’t get premium help since they are not Marketplace plans. You still could avoid paying higher COBRA costs because you can often find plans that offer good coverage at a lower cost than COBRA. These plans comply with the ACA as far as covering preventative care and pre-existing conditions without imposing an annual cap on the dollar value of benefits you get. As with ACA plans, the health care plans can last for as long as you need them as long as the insurer offers the same plan year after year. The rates may go up each year, but you can choose a plan with a deductible and copayment that best fit your needs. Since these plans are not listed on the ACA Marketplace, look for them online or find an insurance agent that offers them and knows a lot about them. A good agent can give you a rundown of all the health plans out there. High-deductible plans make sense to replace a COBRA plan if you think that you will not use your health plan often but want to have it just in case. This type of plan protects you from the most costly health care events. You will still need to pay the full cost for most doctor visits until you meet your deductible. Think about this type of plan only if you feel that you are in pretty good health and are looking for ways to save money during a time when money is tight or a year when you know you’ll have lots of other expenses. You can set up a health savings account to go along with your high-deductible plan to help pay some of your health care costs. When weighing the costs, think about the monthly and the out-of-pocket costs for a COBRA plan when you compare it to other types of plans. COBRA could end up costing less than the other plans in some cases. You don’t have to choose your plan right away. COBRA gives you 60 days from the date you are given the COBRA election notice or the date you expect to stop being covered, whichever is later, to decide if you want COBRA. You may choose to wait out this period if you know you will get a plan in 60 days and then pay for COBRA if you end up needing it. You can also join a spouse’s plan or even use different plans for each family member depending on the health of each. Your goal should be to choose a plan that grants you the care that your household needs when you need it and at a cost you can afford.
