I've been talking about this subject more often than I would like to lately. It's one thing when those conversations are work related-- they pay me well. But, having these talks with friends has really, really sucked. Consider this my Public Service Announcement for 2008. A PSA that hopefully, fingers crossed, will be utterly useless to you. It's about what happens to your employer subsidized health benefits after you lose your job and how COBRA is not always the miracle you think it is. Hang on, I'll explain.
COBRA (the Federal Consolidated Omnibus Budget and Reconciliation Act of 1985, duh) was designed to allow employees (and qualified dependents) to keep their group health care rates, for a limited time, when they lose their jobs due to no fault of their own. This could mean long term unpaid leave, or a few other circumstances, but it usually means after you were fired. I mean, laid off. So the logic is that the group health care rates will be much better than rates you would get if tried to purchase a health care plan on your own, as a private citizen. COBRA lasts from 18-36 months depending on the specific 'qualifying event' (or life status change as we say in the trade), but 18 months is the most common scenario so let's just concentrate on that one. Also, we could complicate things by including Cal-COBRA (and specifically Senior COBRA) but let's not do that either. So, 18 months of group medical coverage after you are laid off.
If you elect COBRA you are responsible for both the employee and the employer portion of the health care premiums, at the group rates. That means, expect to pay considerably more than what had been deducted from your paycheck while you were working. That is the first thing that confuses people. Pay attention to your COBRA rate sheet.
The second thing that confuses people is the assumption that COBRA is always cheaper than what they can get on their own. In my case, this is probably true. But that is because I have a chronic medical condition that makes my fine ass virtually uninsurable at the tender age of 38. Gym membership or no gym membership. In your case, you might be okay. So, here's what you do:
1) Review the benefits covered by COBRA and see which ones you will need. Most likely this is Medical. Dental and Vision you may be able to hold out for until you get your next job. Evaluate what your particular situation is.
2) Review the dependents (spouse, children, NOT domestic partner-- separate but equal, my ass) covered by COBRA and see if any of them have access to other Medical, Dental, Vision care. They may be on your plan because it was the cheapest and that may no longer hold true. Or maybe you just don't like them anymore and don't care if they get sick. I'm not here to judge your life.
3) Actually research what a plan purchased all on your own might cost. Contact the main providers in your area. You may be able to get away with a plan that has less benefits (and cost) than your group plan, but still covers all your health care needs.
4) Check out this resource: www.coverageforall.org. They can help you see if there are plans in your area that you or your dependents might now qualify for. Mainly they let you know about Government and community funded plans are available. And they also have resources about which private insurers are in your area and statistics about local and national uninsured populations.
5) Thanks to the crappy health care situation in this country, when we talk about medical premiums, we are talking about a lot of money. Money that can be better spent on clothes. Get creative with your analysis. If you are researching how much a plan would cost for you, your spouse and a child, still take into account everyone's individual situations. Children often have more free and low cost health care resources available to them. So maybe you elect COBRA for you and the spouse, but find an alternative for your child. Maybe you are someone who is expensive to privately insure because of pre-existing conditions, but no one else is. In that case, maybe you get COBRA for you only and buy private insurance for everyone else.
6) Stay insured. I cannot stress enough how important it is to have the health care coverage, even if it is very expensive. Look into ways to keep costs down, but don't jeopardize your long term financial picture or your health, by getting less insurance than you will actually need or by going without altogether. Trust me, if you saw my medical bills, before they get submitted and paid by Blue Shield, you would cry. And I'm walking around on two legs looking as healthy as all get out.
That's it. Easy enough. If you have questions contact your HR Department or me if you know how to find me. Don't attempt this on your own; I'm a certified professional.
