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COBRA plans explained

Many Oregon employees are offered COBRA health insurance after they leave an employers group insurance plan. The premiums are often very high. The premium you are offered is the total cost of your actual health insurance plan. Meaning, it is the portion you paid plus your employer’s contribution. Large employers typically offer a low deductible and small copay for doctor visits and prescription coverage. COBRA will only last 18 months. After that period, most will be eligible for portability. The premiums will be higher than COBRA. If you become ill during the 18 month period you will be stuck with the high premiums.

The premium for these plans comes as a shock to most employees. The premiums are higher because the plans are not underwritten. In other words, you are guaranteed to have the plans no matter your health situation. The cost for a similar individual (or underwritten) plan is around 40% less than a COBRA premium. However, currently there is a stimulus act that allows 65% of your premium to be paid for if you were laid-off from work. The subsidy is active for the first nine months of COBRA benefits.

Solutions to COBRA:

  1. Apply to an individual plan.If you qualify for an individual Oregon health insurance plan your premiums will be typically lower. The nine month subsidy is very helpful; we suggest apply at the beginning of the eighth month of the subsidy. Keep in mind, every Oregon insurer has different guidelines. Call one of our specialists if you have questions on whether or not your condition is acceptable. We have seen savings of up to 75% of the COBRA premium.
  2. Find an individual plan that fits your needs.Many people in Oregon do not need a benefit rich plan as offered through their employers. Most only need a major medical policy to protect themselves against major loss. For example; a 45 yr old female that visits the doctor twice a year should look at a plan for around $145 rather than COBRA for $480 monthly. You are avoiding basically pre-paying the insurance company for services that your may never need.
  3. Separate family members. Many COBRA plans charge you for “children” regardless of how many are listed. If you have only one child, it may be wise to move them to their own plan for only $100 or less a month. Another situation in which to have separate family member plans is when one member has health issues and the others do not. Leave the member with conditions on the COBRA plan and apply the others to an individual plan.


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