COBRA has long been the standard for anyone that wishes to continue their Health Insurance after they leave their job (either voluntarily or involuntarily). There are other options available to you! Let's look at how one family can save over $500 per month by choosing Health Insurance from the Healthcare Marketplace instead of their employer-provided COBRA plan.
Let's look at an example.
Imagine you're a family of 4 living in the San Francisco Bay Area with an annual salary of $160,000. Your former employer used to provide you with a High Deductible Health Plan (HDHP) through Blue Shield that covered the health insurance for you and your family. Your employer paid 50% of the premium for that plan, and you were responsible for the other 50%. Imagine that plan costs the company $1540 per month:
| Company paid premium: | $770 |
| You paid premium: | $770 |
| Total premium: | $1540 |
$770 per month for Insurance is a pretty good deal!
Let's imagine you've recently left your job or been laid off. You and your family need to continue maintaining your health insurance. Traditionally, your employer will allow you to continue your health insurance through COBRA. "COBRA" stands for the Consolidated Omnibus Budget Reconciliation Act. Don't worry, we won't go into the background of the Act here. Just know that COBRA lets you keep your current health insurance.
The bad news? While you can continue with your current health insurance, your COBRA provider can require you to pay 102% of the entire cost of the plan! In our example, your previously affordable $770 monthly premium now jumps to $1570 per month! There has to be a better way!
ACA and Premium Tax Credits to the rescue!
The Affordable Care Act (ACA) introduced Premium Tax Credits in March 2010 (see our blog post). These credits are available for qualified insurance plans offered by the Healthcare Marketplace and are paid directly to the insurer, reducing your premium payments.
What is the Healthcare Marketplace? The Healthcare Marketplace was created as part of the ACA and allows Healthcare Insurance Providers to provide insurance plans to individuals. Some States use the federal marketplace - healthcare.gov. Other States, such as California, have set up their own - Covered California.
Remember that HDHP Blue Shield plan your employer was offering to you? You can get that same plan through Covered California for $1542 monthly. But wait! When you apply the Premium Tax Credits provided by the ACA, the plan's cost is reduced to $1032 per month! BOOM! We just saved you over $500 per month.
The best part? There is a slew of plans available at various price ranges. In California, you can find plans from Kaiser, Blue Shield, Anthem, and others. In other States, your major insurance providers are covered as well.
To sum it all up...
ACA good. COBRA bad. Even if you don't plan on being out of work for a long time, utilizing the Healthcare Marketplace to replace your employer-provided coverage could save you hundreds of dollars each month! Xiggit can help. We can help you quote policies based on your unique situation to determine how much you can save. It costs nothing to look at your options!
