COBRA vs non-traditional insurance options
With the recent pandemic, many individuals have found themselves out of work. And that means they have lost their insurance as well. In addition to not having a job or income, they are faced with what to do about their insurance. Many think the only option is a high cost COBRA plan. While some insurance needs may require such a plan, there are other options to explore.
First, let’s start with what COBRA is. COBRA stands for Consolidated Omnibus Budget Reconciliation Act and is a program that allows employees who are eligible (as well as their dependents) to continue to use the benefits of health insurance coverage after the loss of a job. COBRA can also be used when a reduction of hours in the current job occurs. From the time notice is given, you have 60 days to choose COBRA. If an employee does choose to use COBRA instead of an alternative health plan, it will be retroactive to cover the prior 60-day period.
COBRA usually will last anywhere from 18-36 months depending on the scenario. COBRA is usually a more expensive option for the employee because the plan is no longer being subsidized by the employer.
Keep in mind, there are several qualifying events that must occur for an employee to qualify for COBRA. Be sure to check with your employer or a broker to learn more.
In addition to COBRA, there are several other options that may be available to someone who is no longer covered by their employer. Many of these options are widely unknown to those who are looking for comprehensive insurance options.
Below we have laid out several options for you to consider.
- Short-term health plans
Short-term health plans were originally created to fill a temporary gap in employment. These plans have grown in popularity as many of them are somewhat comprehensive and can be a good alternative to a more traditional insurance option. Many of these plans start the next day and are offered at a lower cost than COBRA or other similar options.
Short term health plans can be purchased at any time during the year as there is no “enrollment period” for these plans. Recently, these plans have gained popularity as an alternative the expensive COBRA options as employees are in between jobs.
Short term plans can be purchased for an individual, family and in some cases for a “child only” plan.
Short term plans do not meet the “minimum essential coverage” requirements and in
Many cases do not cover pre-existing conditions. We recommend you speak to a licensed insurance broker who can answer questions about your specific situation.
In some cases, an additional insurance “wrapper” can be added for a more overall comprehensive approach to health insurance. These plans are usually a very good, cost friendly alternative to COBRA and other high cost plans.
These plans vary by states and in most cases can be renewed for a total of 36 months.
2. Fixed Benefit/ Indemnity plans
An indemnity health plan allows you to see any doctor or specialist without a referral. In most cases, you will be required to pay upfront for your doctor visit and then submit a reimbursement. Most of these plans do have a required deductible. Once that has been met, the insurance company will pay your claim at what is “usual, customary and reasonable” (UCR) rate. For example, they may pay $100/day for a hospital visit. These are pre-determined amounts negotiated in advance for the specific health option/plan chosen.
This is not a typical “health insurance” plan and isn’t right for everyone but can work if you understand what the plan can and cannot be used for. Many people like these plans because they do not cost a lot per month. In our opinion, these plans are best used in conjunction with other plans as these types of plans can have large out of pockets costs if there is a health emergency.
3. Health sharing plans
These plans have become more and more popular in recent years as health insurance costs have increased for both individuals and families. A health sharing plan usually has a deductible, a co-pay and may or may not cover pre-existing conditions after a certain period of time. Members then share the “out-of-pocket” medical bills for additional health plan participants. These plans can save money on your monthly premium, but be sure to understand what all is covered and what you will need to pay.
Additional add-ons you might want to consider
In many cases for a small monthly fee, you can get “accident coverage” that might also include tele-health among other benefits. In many cases, an accident plan will cover your deductible among other benefits. In most cases, you can get family coverage for as low as $45-50/month.
Depending on your personal health, a prescription plan might make sense for you or your family. Some short term health plans will include this, but there are also stand-alone options as well.
Dental and Vision plans
Most of the plans above do not have dental and vision included but can be added on in most cases for a low monthly premium. Many of these plans will start next day.
A critical illness plan will pay a lump sum with no deductible or co-pay in the event you have a critical illness such as a stroke, heart attack or cancer. Each plan is different, and you would need to check with a licensed broker or the insurance provider to see what is covered. In many cases a critical illness plans will help provide income if you unable to return to work after a serious medical issue.
As always, we recommend you work with a licensed insurance broker to get all of your questions answered and to understand exactly how each plan might work and what is the best option for you and/or your family.
If we can help you in any way, please call our office at 314- 282-7013.