Is COBRA insurance the best option for people between jobs?

For most people, losing a job historically meant losing their health insurance. Under COBRA (the Consolidated Omnibus Budget Reconciliation Act) most employers have to offer terminated employees similar coverage to the health insurance provided while they were employed. The problem is, COBRA is usually offered at full price plus a two percent administrative fee. This basically means once you’re unemployed, your monthly premium is going to be pretty expensive. However, due to the Affordable care Act, new options are available through the Health Insurance Marketplace.

Before we dive in, we created a quick guide for you to refer back to when you are shopping for health insurance. Download it here. Now let’s look at how much COBRA can cost.

How much does COBRA cost?

While you are employed, your employer typically pays the majority of the premium for your group health plan. Under COBRA, you pay your current premium plus your former employer’s portion. In 2015, the average worker paid about $89 per month as a premium for single coverage. Employers paid about 4.5 times that amount for the remainder of the premium. That means a worker who loses their job – and doesn’t need additional coverage for their family – might have to pay around $521 a month, plus an additional $10.42 in administrative fees. The good news is that there are options to get access to quality, affordable care that doesn’t necessarily cost $530 per month.

Health insurance options for the unemployed

If you lose your job, you still have quite a few options for health insurance:

  • Elect COBRA continuation coverage through your former employer
  • Visit the Marketplace to find plans available and affordable to you
  • Purchase private insurance
  • Remain uninsured

Pro Tip: It’s also important to know you only have 60 days from the date of unemployment to decide.

Keep in mind that failing to have health insurance not only puts you at risk physically but financially. For example, a broken leg may cost you up to $7,500 and on average a 3-day hospital stay costs roughly $30,000. Plus, without qualifying health insurance, you could be fined under the ACA “Individual Responsibility Mandate” during tax season — which can cost 2.5% of your household income or $695 per person.

Enrolling through the Marketplace

Losing your job-based health insurance qualifies you to enroll anytime throughout the year. In the Marketplace, you’ll find several affordable plan options according to your anticipated income for the year. An estimated 8 out of 10 people who choose a Marketplace plan pay less than $100 a month as a premium, in large part due to tax credits and financial subsidies that can save you money. Additionally, depending on your state, household size, and projected income, you might qualify for low or no-cost Medicaid benefits.

Want to understand your health care options after employment? Call or make an appointment with a HealthSherpa Consumer Advocate. Don’t delay, though, since you only have 60 days from the date of unemployment to decide.

Don’t forget to download our quick guide so you can refer back to it when shopping for health insurance coverage.


HealthSherpa is a free website and team of real people who can help you find, enroll in, and make the best use of your marketplace health insurance.

Leave a Reply

Your email address will not be published. Required fields are marked *