Low Cost Health Insurance – Part I: COBRA Bites

A funny thing happens when you lose your job. You begin to appreciate the benefits that came with the job, not the least of which was health insurance. Whatever you were kicking in as a contribution to your employer’s medical insurance plan, it’s nothing to what you’re going to have to cough up on your own. So here are your priorities as soon as the pink slip shows up: File for unemployment; update your resume; shop for low-cost health insurance.

But wait a sec, you’re saying, don’t I have COBRA insurance? Maybe you do and maybe you don’t. If your former employer went out of business, if you were fired for gross misconduct or if the company that canned you had fewer than 20 employees (called “qualifying events” in true bureaucrat-ese), you can kiss the COBRA goodbye. Besides the stuff is no bargain. According to the Department of Labor website, your “premium cannot exceed 102 percent of the cost to the plan for similarly situated individuals…including both the portion paid by employees and any portion paid by the employer…plus 2 percent for administrative costs.” That’s for you. If there are dependents involved, there are a whole bunch more provisos and costs. The DOL FAQs do hold out a glimmer of hope, “if your qualifying event was involuntary termination of employment that occurred on or after September 1, 2008 through February 16, 2009, you may be eligible for additional election opportunity under the American Recovery and Reinvestment Act of 2009.”

Your employer is required by law to give you a COBRA insurance election notice within 14 days after “the plan administration receive notice that a qualifying event has occurred.” You have 60 days to decide whether to go with COBRA insurance. If you do, you’ll have 45 days to pay your initial premium. Your COBRA insurance coverage will last for 18 months. There are some provisions available for extension, but unless you have a load of pre-existing conditions or are otherwise uninsurable, you should plan to put some of your new-found spare time looking for low cost health insurance and getting health insurance quotes that fit your (we hope temporarily) diminished circumstances.


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