Which is the Better Option?
Understanding Your Health Coverage Options – COBRA vs Marketplace
Losing your group health coverage, whether due to a loss of employment or personal event, can put you into a state of panic. Luckily, there are options to obtain coverage without leaving you or your family unprotected. It’s advised to understand your options before you find yourself needing a plan. But if you need to know which is the preferred choice between COBRA vs Marketplace insurance sooner than later, here are the basic benefits and disadvantages of each to consider.
What Is COBRA?
COBRA, or Consolidated Omnibus Budget Reconciliation Act, allows employees to pay premiums and keep their group health insurance when a Qualifying Event alters their employment and/or coverage status. These events include:
- Reduction in hours
- Lay-offs
- Involuntary termination
- Voluntary termination
- Divorce
- Death
- Children aging out
COBRA guarantees coverage for employees, spouses, and dependents of those working for a company with at least 20 employees. Any health care, dental, vision, hearing, or prescription drug plans an employee is enrolled in prior to their change in employment status can be carried over for a limited amount of time under COBRA.
But there are concerns to consider. First, COBRA can’t be utilized forever. For most individuals, the maximum coverage window is 18 months. In competitive fields or during rough economic patches, this may not be enough time to secure a new position for those without coverage due to a job loss.
Another concern is that COBRA is considered expensive by most insurance averages. This is because the portion of the premium paid by an employer is rolled into the individual premium payment. With limited financial resources after a job loss, this can prove to be near impossible for some to cover. Luckily, there are other options.
What Is the Marketplace?
The Marketplace, officially known as the Health Insurance Marketplace, is operated by the federal government (though some states provide their own Marketplaces). When someone’s coverage status changes and the high premiums of COBRA are too much, the Marketplace is the best place to turn. Some applicants qualify for tax credits and coverage through Medicaid or the Children’s Health Insurance Program.
The largest advantage of the Marketplace is the more affordable premiums. Families don’t have to worry about being denied coverage based on preexisting conditions and plans have great coverage for both brand and generic medication. However, deductibles can be high and in some areas of the country, there are limited plan options.
Do You Really Need Health Insurance?
Is choosing between COBRA vs Marketplace coverage necessary or can you go without? Health insurance laws are continuously changing, especially in the past decade. So many Americans still wonder if they’re required to have health insurance or if they can go without coverage.
Starting in 2019, there will no longer be a federal penalty for going without insurance coverage. However, being without coverage at any point in 2018 will leave individuals paying a penalty fee. But don’t think coverage can be skipped entirely. There are several states that will continue to require coverage in 2019 while several more states are working on passing similar legislation.
COBRA vs. Marketplace Coverage – Final Tips
Insurance decisions should be based on an individual’s unique needs. It will take some time to determine if COBRA or the Marketplace is the best choice after an employment and/or coverage status change. But there are a few final tips to keep in mind.
- Take the time to compare premiums, deductibles and plan details before making a choice. In most cases, there is a 60-day window after a change in coverage to decide.
- Switching plans can be difficult. If you choose COBRA, you will not be able to switch to the Marketplace until the next Annual Open Enrollment Period. Should you refuse COBRA coverage or not sign up within the 60-day election period, you will not be able to enroll in the future (unless another qualifying event should occur).
- Whether your state legally requires health coverage or not, choosing to go without is never recommended.
Health insurance can be complicated and finding yourself suddenly facing a loss of coverage can be intimidating. Luckily, individuals and families have more options than ever to secure adequate health coverage. Making the choice between COBRA vs Marketplace coverage can be time-consuming, but well worth your efforts.