COBRA Gets Friendlier

If you were laid off after September 1, 2008, COBRA just got friendlier. The stimulus bill will pay 65% of your premiums for the next 9 months. Even if you took a pass on COBRA at the time of layoff, you have a new opportunity to sign up.

Having been unemployed twice in my life, with the option to take COBRA, I'll say this: it's expensive. The first time I was eligible, I was a young, healthy 23 year old and still had to shell out $500+ a month to stay on the plan. Lucky for me, my parents were willing to chip in. If I was laid off today with the same $500 COBRA payment, the government would chip in $350 and I would only have to pay $175...which is still a lot of money while unemployed, but much more reasonable than the full amount.

Then the question becomes: can I buy an individual health insurance plan that will cost even less than the government subsidized COBRA? A quick search on eHealthInsurance yielded a plan "as low as" $93 per month -- it's a PPO with a well known health insurance provider, but the deductible is $1,200 and the office visit copay is $30. This isn't a bad option if you're healthy and unlikely to need to chip into that $1,200 deductible anytime soon. For comparison sake, it would be $82 less per month than my former COBRA payment with government help.

One thing to consider about online health insurance estimates is that an estimate is all it is. Enter more information for a formal quote, and you could see your price skyrocket. If you're someone who uses medical care frequently, you might be better paying COBRA and staying with your current plan (especially if you've already contributed a significant amount to an annual deductible).

The second time I was eligible for COBRA, I went onto my husband's health insurance plan instead. Joining his plan cost more than what I was paying as an employee, but it was much less than I would have paid on COBRA.

Overall, know your options. There's more than one way to get health insurance. If you decide to use COBRA, make sure you get the government contribution. If your former employer hasn't contacted you about the government program, be proactive and give your HR rep a call.