OT - Jessica

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AlyssaEimers's picture
Joined: 08/22/06
Posts: 6567
OT - Jessica

I would wondering if you could tell me exactly how COBRA insurance works. Thanks so much!

(DH's student withdrew in the middle of the school year. He is thinking about working for himself until something else comes up, but we are looking into insurance options.)

Joined: 08/17/04
Posts: 2226

Hmmm.....not an expert on Cobra but you have to be in a Cobra eligible situation and the company you work for has be a Cobra providing company (or school). It is company based not insurance based. You are eligible for up to 18 months. The business you work for will give you paperwork on the vendor they use for Cobra administration and they have 30 days from the last day of employment to give it to you and you have 60 days to elect. The new vendor will take over admin of your insurance plan. You will pay them 105% of the premium but the government has subsidies if you qualify.

Here is the website for more answers:
COBRA Continuation Coverage

AlyssaEimers's picture
Joined: 08/22/06
Posts: 6567

Thank you.

Joined: 08/17/04
Posts: 2226

you're welcome.

Spacers's picture
Joined: 12/29/03
Posts: 4103

Here's another thing to consider, if your DH goes the self-employed route. If he purchases an individual health insurance policy, then the premiums are deductible as a business expense, which in turn lowers his self-employment tax. The deduction is only available for the months that he (and you if you're employed) are not covered by or eligible for an employer's group health plan. And it's only available to the extent that the business otherwise makes a profit, meaning you can't take the full deduction if it puts the business into the negative on earnings for the year.

Publication 535 (2012), Business Expenses
Form 1040 Line 31 Self-Employment Health Insurance

AlyssaEimers's picture
Joined: 08/22/06
Posts: 6567

Thanks for the tip. COBRA insurance I think will be fairly expensive, so I am not sure we will go that route or not. I think he is going to try to stay put for the remained of the school year, then do something different for next year.

mommytoMR.FACE's picture
Joined: 04/10/09
Posts: 781

Cobra is expensive but cheaper than a $13,000 surgery Smile

AlyssaEimers's picture
Joined: 08/22/06
Posts: 6567

"mommytoMR.FACE" wrote:

Cobra is expensive but cheaper than a $13,000 surgery Smile

I did not mean that we would not have insurance. Other options would be that he kept his current job until a job with insurance came up, or we got individual insurance not through an employer.

SID081108's picture
Joined: 06/03/09
Posts: 1348

"Jessica80" wrote:

Hmmm.....not an expert on Cobra but you have to be in a Cobra eligible situation and the company you work for has be a Cobra providing company (or school). It is company based not insurance based. You are eligible for up to 18 months. The business you work for will give you paperwork on the vendor they use for Cobra administration and they have 30 days from the last day of employment to give it to you and you have 60 days to elect. The new vendor will take over admin of your insurance plan. You will pay them 105% of the premium but the government has subsidies if you qualify.

Here is the website for more answers:
COBRA Continuation Coverage

The COBRA subsidies ended in 2011 and they were only for people who were involuntarily terminated (so if you quit you weren't eligible). COBRA is very expensive and unless one of you has major health issues, he can more than likely find similar coverage at a lesser cost in the open market. Our Family COBRA premium is $1,684 a month for medical and dental, and that's actually less than most I see.

Joined: 08/17/04
Posts: 2226

Thank you for coming to correct the information. I do not work as a Cobra vendor so I didn't realize the subsidy had ended.

A direct pay plan may work in your favor if local rules allow you to elect an individual plan if you are Cobra eligible.

AlyssaEimers's picture
Joined: 08/22/06
Posts: 6567

"Jessica80" wrote:

A direct pay plan may work in your favor if local rules allow you to elect an individual plan if you are Cobra eligible.

Unless something has changed in the last 10 years, I think you can get a direct plan here. DH used to have Blue Cross Blue Shield for Individuals even though he could have gotten insurance through other sources. It was just cheaper to do it that way. For me, I have several health problems that I am not sure I can get individual health insurance. We will see though.

SID081108's picture
Joined: 06/03/09
Posts: 1348

Good luck, Bonita! I hope everything works out.

AlyssaEimers's picture
Joined: 08/22/06
Posts: 6567

Thank you. I called Blue Cross Blue Sheild of TN today (That is where DH used to have insurance), and it not that much more than we are paying now. COBRA was almost double. DH and I talked about it some today. I believe if he branched out on his own, he would make about $20,000 more a year. Even if health insurance was $10,000 a year, we would still be ahead $10,000 a year.

Spacers's picture
Joined: 12/29/03
Posts: 4103

Don't forget to make sure whether the policy they're offering is comparable to the one you have or not, so you know if you're comparing apples to apples, or apples to oranges. If the offered policy has higher co-pays or a higher deductible to meet, then you'll need to factor those out-of-pocket costs into your weighing of the pros & cons.

AlyssaEimers's picture
Joined: 08/22/06
Posts: 6567

The insurance agent I talked to yesterday sent me a quote. The individual plan was either $410 a month with a $5,000 deductible or $560 a month with a $3,000 deductible. Preventive care was free. Other than that, nothing was paid until the deductible was met, but 100% after that. The rate might go up after a health questionnaire. (PTL, nothing major was wrong to prevent me from being able to get insurance)

The plan we have now is about $400 a month. $35 co-pay for doctor visits, $45 co-pay for a specialist, $150 co-pay for ER. $1,000 deductible per person, $2,000 deductible per family. We pay 20% after that until the maximum out of pocket is paid which is $2,000 per individual and I think $4,000 per family.

The COBRA would be the same as the plan we have now, but $1,300 per month.

ftmom's picture
Joined: 09/04/06
Posts: 1538

I dont have any advice, but I am feeling so happy right now that we dont have to deal with this. Figuring out my pharmacare plan is hard enough Smile