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COBRA vs. Health Insurance Marketplace FAQ
If you’ve been faced with a job change, it's important to find the best option to keep your health insurance coverage. Traditionally, the only option has been an expensive one — to continue your plan through COBRA.
You may not be familiar with the Health Insurance Marketplace (HIM) and the plans available, especially as an affordable alternative option to COBRA. Not only are Marketplace plans less expensive than COBRA, 80% of people will usually qualify for financial help from the government (called a subsidy) to help pay their premium.
|Group Plan||COBRA||Marketplace Plan|
|What's covered?||Usually full coverage with prescription drug benefits.||Usually full coverage with prescription drug benefits.||Usually full coverage with prescription drug benefits.|
|When can they enroll?||Typically offered to employees on a full-time status within a designated time from their date of hire.||Within 60 days, retroactive from the date of job loss.||Within 60 days from the date of job loss.|
|How long is coverage available?||As long as employed full time and employer offers coverage.||Typically 18-36 months.||Coverage is active as long as monthly premium payments are made. Coverage will need to be renewed at the end of the calendar year.|
|How much does coverage cost?||Varies by plan and employer. Many employers cover some portion of the plan’s cost.||The same as the qualifying group plan, but the employee pays the full plan cost, plus a COBRA administration fee.||Varies by plan selected. Generally, these plans are significantly less than COBRA, and most people also qualify for financial assistance (subsidies) that reduce their premiums and in some cases further reduce copays, deductibles and out-of-pocket costs.|
Health Insurance Marketplace FAQs
Marketplace insurance refers to health plans that meet the "minimum essential coverage" and other requirements of the Affordable Care Act (ACA). You can explore and enroll in Marketplace health insurance plans on government Marketplace websites or directly on some plan websites.
Nearly all Americans can enroll in Marketplace health insurance.
You are eligible for a Special Enrollment Period when you have a Qualifying Life Event, such as losing a job. Typically this Special Enrollment Period is 60 days. If you miss this Special Enrollment Period, you will have to wait until the next Open Enrollment Period to get health insurance.
The cost depends on the type of plan you choose. The Department of Health and Human Services said the annual premium for the benchmark Markeplace plan in 2017 was $3,624. However, it's important to note that 8 out of 10 people typically qualify for financial assistance (called a subsidy), and that reduces the premium cost even further.
All three plan types cover all of your essential healthcare needs. The difference is the ratio of premium cost vs. out-of-pocket costs (OOP). Bronze plans generally have lower premiums, but higher OOP if you need a lot of care. Gold plans have high premiums that help limit OOP. Silver plans provide the best value for most people, in terms of premium costs vs. OOP - especially if you qualify for financial assistance which will further lower your premiums.
COBRA stands for the Consolidated Omnibus Budget Reconciliation Act. If you're losing your employer-based health benefits, COBRA allows you to continue being on your employer's group health plan at your own expense.
If your employer-sponsored health insurance plan is covered, you'll get COBRA insurance as an option if you lost your job. If you have a spouse or dependent children on your employer-based health insurance, they'll also be covered in those circumstances.
Typically you have at least 60 after you lose your employer-sponsored health insurance to decide whether you want to enroll in COBRA health insurance.
The cost depends on the plan you had under your employer - but now you are responsible for paying the full monthly premium in addition to a 2% administration fee. In 2017, the average annual premium for employer-sponsored health insurance was $6,690 for an individual and $18,764 for a family.
Coverage typically lasts from 18 to 36 months. However, if you choose to terminate your COBRA coverage during that period, you cannot start it back up again.