Consumers With COBRA Coverage Should Weigh Moving To Health Law Plans

As the open enrollment season for employer-sponsored health insurance gets underway this fall, experts say there’s one group that should definitely consider changing plans: people who have coverage through their former employer under the federal law known as COBRA.

COBRA allows people who leave their jobs to keep their job-based group coverage for 18 months, sometimes longer, and COBRA enrollees generally renew that coverage during the company’s enrollment period. But the catch is that former workers are responsible for the entire premium, usually a hefty increase over their previous monthly bill because they lose the employer subsidy, which typically runs about 75 percent of the cost.

Before the health law passed, people who lost their jobs may not have had other options. Plans on the individual market could turn people down because of their health, and the coverage was often skimpy and expensive in any case.

Times have changed. Now individual policies sold through the state marketplaces must offer comprehensive benefits and accept all applicants without charging sick people more. People with incomes up to 400 percent of the federal poverty level (currently $47,080 for one person) may qualify for premium tax credits to make coverage more affordable.

People who have COBRA can generally sign up for a marketplace plan only during the regular enrollment period, which this year runs from Nov. 1 through Jan. 31. (They also have a special enrollment opportunity later in the year if their COBRA coverage expires or if they have a major life event such as getting married.) Even if people renew their COBRA coverage through their employer this fall, they can review state marketplace plans starting Nov. 1 and opt to drop their COBRA coverage and sign up for a marketplace plan that would start Jan. 1.

“If people are going through COBRA annual enrollment this fall, I’d suggest looking into coverage on the state marketplaces,” says Craig Rosenberg, who leads the health and welfare benefits administration practice at benefits consultant Aon Hewitt. “They may find that it is better to drop COBRA coverage and purchase coverage through the marketplace for 2016.”

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