Faced with sudden unemployment, some former employees gravitate toward buying insurance mandated by COBRA (the Consolidated Omnibus Budget Reconciliation Act), a previous stand-by health care solution for some consumers.
COBRA seemed like the natural progression “in the old days” before the Affordable Care Act (ACA) was passed and remained one of the few options for consumers who could not afford to purchase health insurance especially if they had a pre-existing condition or were concerned the plan would drop people from their coverage if they became ill, said Nate Purpura, vice president of consumer affairs at eHealth.com, an online health insurance exchange based in Mountain View, Calif. Some consumers opted out of COBRA because it was frightfully expensive, and today it still remains 50% higher than private plans.
The average annual COBRA premium for an individual’s coverage is $6,145 (or $512 each month), while family coverage is $17,170 (without subsidies), according to using figures from the 2014 Kaiser Family Foundation’s Employer Health Benefits Survey. Under COBRA, the enrollee typically pays both the employer and employee portion of the health insurance premium plus an administrative fee of 2%.
The amount for private or self-purchased plans is typically 50% less. For individual coverage, the average annual premium is $3,432 while family coverage is $8,724 (without subsidies). COBRA is not the saving grace it once used to be for people who are unemployed. Under the ACA, consumers who lose their employer-based health insurance qualify for a special enrollment period, which means they can purchase health insurance outside of the restrictive nationwide open enrollment period whether they quit or were fired. Still, they must do so within 60 days.