If you’ve recently lost or left your job and you no longer have employer-sponsored health coverage, you may be thinking: Now what? We know this can be an incredibly stressful time, especially if you have family members who rely on your health insurance as well.
If you’re under 65 and not yet eligible for Medicare, the big decision you need to make is which option you will choose, COBRA, or a policy under the Affordable Care Act (ACA). Don’t worry if you’re not yet sure which is the best route for you to take, we’ve broken down everything you need to know to make an informed decision.
What exactly are these coverage options?
COBRA (Consolidated Omnibus Budget Reconciliation Act) is a federal law that allows you to temporarily keep health coverage after your employment ends, or you lose coverage as a dependent of the covered employee or another qualifying event. If you choose to elect COBRA coverage, you pay 100% of the premiums, including the portion your employer used to pay, plus a small administrative fee.
ACA Health Insurance
The Affordable Care Act is the comprehensive health care reform law enacted in 2010, also known as “Obamacare.” ACA insurance refers to individual health insurance plans that meet the “minimum essential coverage” and other requirements of the Act. You can browse and enroll in these plans on the government Marketplace websites, or through a trusted partner of healthcare.gov, such as W3ll!
What option(s) am I eligible for?
You’ll receive COBRA coverage as an option when you lose or quit your job if your employer-sponsored health plan is covered under COBRA. If you’re still employed but have been given reduced hours, you’re also eligible. With COBRA, your spouse and any dependent children on your health plan are covered. You can also keep the same coverage meaning your current doctors are guaranteed to be in-network and you won’t need to change care providers.
ACA Health Insurance
Almost all Americans are eligible to enroll in health coverage through the Marketplace unless you:
- Don’t live in the United States
- Are not a United States Citizen
- Are incarcerated
- Have Medicaid coverage
If you are not a U.S. citizen or U.S. national, you may also be eligible, depending on your status.
So far so good…but what is this going to cost me?
The cost of COBRA coverage depends on the health insurance plan you had under your employer. Even though you are keeping the same plan, you will now be responsible for paying the full monthly premium. You also will need to pay a 2% COBRA administration fee. On average, the total annual cost of COBRA coverage in 2019 was $7,012 for single coverage and $20,599 for family coverage.
ACA Health Insurance
The cost of ACA health insurance depends on the type of plan you choose. Plans in the Marketplace are presented in 4 “metal” categories: Bronze, Silver, Gold, and Platinum. Bronze has the lowest monthly premium, but the highest costs when you need care, whereas Platinum has the highest monthly premium and the lowest costs when you need care. See here for the full breakdown of each tier!
Additionally, you may be eligible for subsidies through premium tax credits and cost-sharing reductions to make insurance more affordable. The Advanced Premium Tax Credit (APTC) is a credit you can take in advance to lower your monthly payment. If you’re interested in applying for the APTC, here’s what you need to know about eligibility.
On average, the total annual cost for a silver plan after a premium subsidy* is applied is $2,484 ($6,723/year without a subsidy). The average annual premium for a family of 4 is around $$14,400/year without a subsidy. The total cost of both individual and family insurance depends on age, location, plan category, tobacco use, and number of plan members. For a look at the average premium (not including a subsidy) for your state, go here.
*Subsidy amounts are based on a 40-year-old nonsmoker making $30,000 /year.
How can I enroll in one of these coverage options?
If you are eligible for COBRA coverage, you are entitled to an election period of at least 60 days after you lose your employer-sponsored health insurance to decide whether you want to enroll or not. If you waive COBRA coverage during the election period, you must be allowed to revoke your waiver of coverage later and elect continuation coverage if you do so during the election period. COBRA coverage can also be retroactive, so you won’t have to worry about a coverage gap during that enrollment window!
ACA Health Insurance
Open Enrollment occurs annually from November 1st – December 15th. Outside of this window, you are eligible for a Special Enrollment Period (SEP) if you have a Qualifying Life Event (QLE), such as losing a job or getting married. This SEP is usually 60 days. If you miss it after your QLE, you will have to wait until the next Open Enrollment Period to get coverage.
Good to know: If you know that you are eligible for COBRA coverage, you are likely eligible for a SEP as well, as losing your job is considered a QLE.
Hang on! I have COBRA coverage already, but I am interested in switching to an ACA plan. Is this possible?
If you’re already enrolled in COBRA, you may have options in the Marketplace. Per healthcare.gov:
I’m still not ready to decide. How do I choose the best coverage option for me?
When weighing your options, remember to consider both your financial situation and your health needs.
For qualified individuals, subsidies can make ACA health insurance much more affordable than COBRA. Choosing an ACA plan also allows you to choose a different health insurance plan, which could be a great option for you if you weren’t satisfied with your employer-sponsored coverage.
For others, COBRA coverage can be the easiest and most convenient choice if you are happy with both your employer-sponsored plan and your doctors. COBRA coverage is also a great choice if you expect to get coverage through another employer soon.
Find your Marketplace plan almost instantly with our subsidy calculator. Answer a few questions and see your results with no commitment to continue any further. Once you’ve compared the cost of your COBRA to the cost of your plans, you can continue your Marketplace shopping and enrollment.