COBRA stands for Consolidated Omnibus Budget Reconciliation Act, which is a U.S. federal law that allows individuals to continue their employer-sponsored health insurance coverage for a limited period of time after leaving their job or experiencing certain qualifying events that would otherwise result in the loss of coverage.
COBRA can be expensive because the full cost of the health insurance coverage is typically borne by the individual who elects to continue the coverage. When you are employed, your employer often subsidizes a portion of your health insurance premium, which helps reduce the cost for you. However, under COBRA, you become responsible for the entire premium amount, including the portion previously covered by your employer, as well as any administrative fees.
Furthermore, COBRA premiums can include an additional 2% administrative fee. This fee is meant to cover the administrative costs associated with offering COBRA continuation coverage. As a result, the total cost of COBRA coverage can be significantly higher than what you were paying as an active employee.
It's important to note that COBRA coverage is typically temporary, lasting up to 18 months in most cases, although it can be extended to 36 months under certain circumstances. During this period, individuals are expected to find alternative health insurance options, such as through a new employer, private insurance plans, or government programs like Medicaid.
The high cost of COBRA coverage often prompts individuals to explore alternative options that may offer more affordable health insurance, particularly if they do not anticipate needing the comprehensive coverage provided by their previous employer's plan for an extended period of time.
If you are facing the prospect of enrolling in COBRA or currently paying the high premiums for COBRA coverage, there are excellent alternative options available that provide high-quality health insurance at a more affordable price. Feel free to contact me directly at 313-820-6596 or schedule a consultation at your convenience to discuss these alternatives in detail. https://www.phis.health/booking-calendar/consultation?referral=service_list_widget