'Cobra' and Health Insurance: Your Questions Answered
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What is the main topic discussed in this episode?
Here's your Money Briefing for Thursday, May 7th. I'm J.R. Whalen for The Wall Street Journal. Most Americans who have been furloughed from their jobs during the pandemic are at least able to hold on to their health benefits.
What is COBRA and who is eligible for it after a job loss?
But millions of others have lost both their job and their health coverage. As a backstop, many are turning to a health insurance continuation program known as COBRA.
You can keep your same doctors. It's a medical plan like you had before. So anything that was covered prior should be covered under COBRA.
That's Wall Street Journal personal finance reporter Veronica Dagger. Coming up, she'll discuss the costs involved in COBRA and how long coverage lasts.
Americans who have lost their employer-provided health insurance because of the pandemic have a popular option to keep their coverage intact. It's a federally mandated program called COBRA, but there are important facts about it to be aware of. And Wall Street Journal personal finance reporter Veronica Dagger joins us with details. So, Veronica, COBRA is pretty expensive.
It is very expensive.
How much more expensive can COBRA premiums be compared with employer-covered plans?
So typically, if you're employed, your employer, if they offer health insurance and you're covered by that, they pick up a fair amount of the premium that is owed to the insurance company. Under COBRA, you can still get insurance. However, for an individual, it could be up to five times more than what you would pay. Under COBRA, employees are responsible for 100% of the health benefit premium alone. plus up to a 2% administrative fee. So that could be up to five times more than what you would pay if you were still on your employer's plan and they were still kicking in some money.
Is there any room for negotiation with your employer on, say, sharing costs?
There could be. You know, if you're an executive, you're a management type, you might have some leverage with this. I've heard some executives able to negotiate with their companies for, say, a couple months of COBRA coverage.
Can employees negotiate employer contributions toward COBRA and which workers have leverage?
The company might pick that up for you, but it really depends. If you're a rank and file, you can try, but they're probably not going to do anything for you.
Do all companies offer COBRA coverage?
Not all companies offer COBRA. So if your company has 20 or more employees, the company is in most cases required to offer COBRA. However, there's an exception if you work for the government or you work for a religious institution, they are not required. If you work for a company that has less than 20 employees, there are options out there. Your company will tell you about them. Some of them are similar to COBRA, but again, probably pricey. So COBRA is just like your regular insurance in certain ways. So you can keep your same doctors. It's a medical plan like you had before. So anything that was covered prior should be covered under COBRA. It's not going to cover things like your supplemental coverage, like disability or life insurance, but you should be able to go to the same doctors.
What coverage does COBRA maintain — will I keep the same doctors and medications?
Generally speaking, you should be able to get the same medications as before. So that's a real benefit of going on COBRA is that consistency in care that you'll likely receive.
How long does the coverage last?
For someone who lost their job and is on COBRA, generally you're entitled to have up to 18 months of continuous coverage. There's some exceptions to that, but that's what's in general.
Now, if somebody has a health savings account or an HSA, can that money be used?
you should be able to use that money to pay your COBRA premiums, which is a really nice benefit. And if your COBRA plan or your employer's plan allows this, you should be able to keep contributing to that HSA if you are able to do so financially. This is nice because if you're using your HSA money to pay that COBRA premium, you're basically paying that COBRA premium with pre-tax dollars from that account without penalty. And that's a very nice benefit.
And there's a time frame from which you have to sign up.
If it's selected within 60 days, COBRA coverage begins on the day of the qualifying event, such as your layoff, meaning there won't be a gap in coverage.
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Chapters
7 chapters
1
What is the main topic discussed in this episode?
0:05–0:16
2
What is COBRA and who is eligible for it after a job loss?
0:16–1:12
3
How much more expensive can COBRA premiums be compared with employer-covered plans?
1:12–2:06
4
Can employees negotiate employer contributions toward COBRA and which workers have leverage?
2:06–3:07
5
What coverage does COBRA maintain — will I keep the same doctors and medications?
3:07–4:33
6
How long does COBRA last and when must I sign up to avoid coverage gaps?
4:33–5:04
7
What affordable alternatives exist to COBRA, including Marketplace plans and Medicaid eligibility rules?
5:04–6:18
Speakers
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