I get emails every day about sticker shock when people find out their COBRA premiums. Really they are finding out how much their former employer contributed to their health plan, since it helps the employees and the business gets a nice write off.
Because of the expense, employees usually wait for two months before deciding whether to exercise their COBRA option, which they can get back into. The rational choice is to remain uninsured until the end of the COBRA eligibility period. If you are sick, then sign up for COBRA. If you are healthy, buy a low-cost health insurance policy in the individual market
COBRA continuation health coverage gives former employees a chance to continue being covered under their former employer's group health care plan. Premiums will be significantly higher for the former employee because they will be paying for both their share and the business' share of the premium, plus a 2% administrative fee.
Add the amount of the employee's portion (i.e. $150) of the premium plus the employer's portion (i.e. $450) of the premium to get the total premium. $150 + $450 = $600.
Add the plan administrative fee of 2%. In the example, $600 x 0.02 = $12, so the total premium would be $600 + $12 = $612. This is how much your employee COBRA payments would be.
Although the premium for COBRA is costly, it is usually a lot less than paying medical procedures with un-negotiated rates out of pocket. COBRA is also a good alternative for people with pre existing conditions that can't buy a health insurance policy on the open market.
Craig Casey is an Writer, Coach, Blogger, Husband, and Former Health Insurance Agent helping people on the web since 1999 with their health insurance problems.
blog comments powered by Disqus
