COBRA is becoming increasingly more important as more people find themselves in a position where they need to move on from a job that you’ve been relying on for health insurance. Whether you’re job hunting, taking an entrepreneurial route or finding some combination that works for you, health insurance is bound to be an important question.

More than COBRA Basics

The idea behind COBRA is fairly well known. The federal government passed a law that requires insurance companies give employees the ability to continue health insurance coverage after they leave a job. The exact amount of time a person can hang on to COBRA coverage after leaving a job varies and coverage can be expensive — but under the American Recovery and Reinvestment Act of 2009, it’s possible to get a subsidy towards COBRA coverage.

But understanding your access to COBRA coverage requires a little more knowledge than the basics. Even signing up for COBRA can be difficult — and if you need the new subsidy, it’s even more complicated. The first step is making sure that you can qualify for both COBRA and the subsidy: both are administered through your former employer and that company’s health insurance plan. If you qualify for another insurance plan, like Medicare, a plan with your spouse’s employer or another group healthcare plan, you are ineligible for the subsidy.

Alternatives to COBRA

Continuing your health insurance under COBRA can be extremely expensive. While you’re employed, your employer covers the largest portion of your costs, but when you’re covered under COBRA, you’re responsible for the full premium amount. It’s expected that the subsidy, which will cover up to 65 percent of your premium for 9 months, will help significantly, but you’ll still be stuck with a pretty significant cost.

There are alternatives to using COBRA coverage, including purchasing private coverage for yourself and your business. In order to answer your questions about how COBRA and private health insurance stack up, eHealthInsurance has set up a website offering extensive information about both COBRA and individual plans at www.cobralearning.com. Most importantly, the site offers a checklist of when to choose COBRA and when to get a plan of your own.

Consider COBRA if:

• You are pregnant or plan to become pregnant within the COBRA coverage period
• You have a pre-existing medical condition
• You are taking prescription medications, need to undergo a medical procedure in the near future, or need extensive medical care
• You have recently been declined for private health insurance

Consider purchasing an individual and family plan if:

• You are in relatively good health
• The COBRA option is too expensive
• You are seeking health insurance coverage beyond the COBRA term (typically 18 months)
• You are seeking a low-cost short-term plan, such as a 90-day individual health plan

The site also offers calculators to help you determine the subsidy you might receive towards COBRA coverage, as well as premiums for private plans. Equally important is the information on switching between COBRA coverage and a more long-term solution — if you decide not to move back into a job that offers health insurance as a benefit, you may need to purchase a private plan.

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We all complain about the high cost of health care, especially our routine insurance payments. But it can be hard to be sure when our insurance costs are really out of line compared to our alternatives. There are plenty of factors that play into our health insurance premiums — for instance, women pay $26 per month more than men on average. A new report, The Cost and Benefits of Individual Health Insurance Plans, took a look at all those factors. The report is derived from data reported on over 227,000 individual and family medical policies purchased through www.eHealthInsurance.com that were active in August 2007.

The report showed that the average monthly premium for an individual is $158 and for a family is $366. But, in addition to the affects of gender on cost, the geographic location of the policy holder greatly influenced costs:

• West — $150
• Midwest — $130
• South — $154
• Northeast $239

While most regions are actually below average, the cost of insurance in the Northeast is dramatically higher. These figures are, of course, only averages. While it’s reasonable to expect your premium to be in line with these numbers, if you have certain benefits your costs may differ. For instance, eighty-seven percent of individual policies (eighty-two of family policies) have some sort of increased prescription drug benefits. While it’s a relatively common benefit, having it can inch your premium upwards.

Five Tips for Managing Your Health Insurance Budget

eHealthInsurance, the source of the information reported above, has created a list of tips to help you bring your health insurance budget back into line with what others are paying in your area if it’s not as comparable as it should be.

1. Look at the premium for your current employer-sponsored plan and see if that premium is increasing. If saving on your monthly share of the premium is a priority, you may want to revisit this plan and opt for one of the less expensive plans available from your company’s benefits provider.
2. Buy only what you need and potentially save on the monthly premium. Choosing a high deductible plan is smart for some individuals and families because it typically reduces monthly premiums, but you must be prepared to pay the amount of the deductible in the coming year as health care needs arise.
3. Check your spouse’s plan to see if the employee share of the premium is more or less than your plan. It may be more cost-effective to insure you or your family under their plan.
4. If you think losing your job is a possibility in the next year, start reviewing your employer health care plans now. During open enrollment, you may be able to choose a plan that would cost less if you were later required to pay all of the premium through COBRA. Always make sure that the plan you choose will cover the health care benefits you need for the coming year.
5. Mix and match: Depending on health conditions, sometimes it is less expensive for certain family members to be on a separate plan than the employer-sponsored plan. Do the math on separate policies if there are special needs. It’s easy to price individual and family plans online.

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