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Life After Salary: COBRA vs. Individual Health Insurance

This article was written by in Health, Insurance. 15 comments.


One month ago, I notified my boss at the corporation where I worked that I would be leaving. I was headed for the new frontier. Leaving my salary and benefits behind, I looked to the horizon and contemplated what I needed to do in order to keep my life secure. My biggest concerns besides maintaining my income were health insurance, structure and motivation, saving for retirement, and the human connection. I’ve taken some steps to keep myself moving forward already; the first step has been regarding my health insurance.

Last month, I didn’t know what to expect regarding COBRA coverage. My notice arrived last week, and with the cost in hand, I’m ready to decide whether to continue the same coverage I had from my former employer through COBRA or to seek opening a plan from New Jersey’s list of providers. The same plan (Aetna HMO) costs about 10% less when enrolled through COBRA compared to the state’s price. Apex was spot on with his comments. My state does regulate the pricing scheme, but my expectations for COBRA’s prices were way off.

I like the plan I had at my company (or would have had in 2011 — there was a slight change to include a low deductible), so rather than shopping for something new, even if something else would be less expensive, I’ve accepted COBRA coverage.

The tougher question is whether to continue my dental insurance coverage. For $575, I can continue my coverage, which paid for 100% of the negotiated rates for covered services. My annual expenses, consisting of the co-insurance I’ve paid at each dentist visit, add up to about the same amount each year. I could reduce some of the services I get. Yet, I prefer having the peace of mind that if something were to go wrong with my teeth that would not be covered by medical insurance, I would still be covered. I’ve accepted dental coverage through COBRA as well.

The process of accepting coverage was surprisingly easy. I logged into a website administered by the third party company acting as a firewall between the insurer and me. The site confirmed my identity using just my Social Security number and I was able to create yet another account on yet another website. There are options to accept coverage my mail or by phone, as well.

Even though the choice of continuing my coverage under COBRA was an easy decision to make and the process for making that choice was easy, it seems to be the best option out of the choices offered by the insurance companies directly to consumers in New Jersey.

Photo: The Bode

Published or updated January 3, 2011. If you enjoyed this article, subscribe to the RSS feed or receive daily emails. Follow @ConsumerismComm on Twitter and visit our Facebook page for more updates.

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About the author

Luke Landes, also known as Flexo, is the founder of Consumerism Commentary. He has been blogging and writing for the internet since 1995 and has been building online communities since 1991. Find out more about him and follow Luke Landes on Twitter. View all articles by .

{ 15 comments… read them below or add one }

avatar Jenna

“The same plan (Aetna HMO) costs about 10% when enrolled through COBRA compared to the state’s price.” 10% MORE?

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avatar Luke Landes ♦127,435 (Platinum)

No, COBRA costs less. Missing words can cause confusion. Sorry!

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avatar Jenna

No biggie. When I looked into COBRA, my plan cost $10/month more. Crazy.

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avatar Candide

I’m curious as to your satisfaction with dental insurance. I had it briefly, but found that the only dentists that took it were horrible and it wasn’t worth it.

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avatar Luke Landes ♦127,435 (Platinum)

My dentist doesn’t “take” insurance, either, so the insurance company considers it out of network. The insurance company still pays for most of the procedures, though. I’ve been going there for ten years or so, and I never had any problems, and they never tried to sell me on anything unnecessary.

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avatar Barb Friedberg

When I left a job and took the cobra to cover until the next position’s insurance kicked in, I WAS SHOCKED at the price. It was close to triple or quadruple the amount I paid while employed. I’m glad yours worked out okay. I’m sure you’re aware you will need to find another insurance when the cobra wears out. Best of luck, Barb

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avatar Scott

I run into this issue frequently – whether or not to apply for COBRA when I find myself out of a job. I always think that I’ll just tape a sign to my chest instructing a physician to mail in the application for COBRA in my back pocket if I’m unconscious and I need surgery.
Lately, I’ve become more serious and looked into a high deductible health plan for around $100 per month. This has decent coverage after the deductible and allows me to set up a Health Savings Account where contributions are tax deductible. The only drawbacks to this are maternal care (doesn’t affect me – I’m an unmarried guy) and dental aren’t coverage. Money from the HSA can be used for the dental, but there is no insurance coverage – it’s all out of pocket.
Still, I’m healthy, don’t go to the doctor frequently, so I think I can swing this plan.

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avatar TakeitEZ ♦549 (Dime)

I always thought COBRA would actually be considerably less than 10%. Guess I was wrong. It is still a good choice.

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avatar Fred Sneed

Flexo:

Many people are going to higher deductible plans and calculating the money they would save (provided they don’t get hurt or sick). I just did this and saved $200 per month. For Dental I was blessed with good teeth and I brush and floss, so still no cavities.

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avatar Wojo ♦146 (Cent)

My wife has been laid off twice, and we now have individual insurance, so I have fairly good experience with both options. For younger and relatively healthy people like us, it seems that individual insurance was almost always the better option because you could get a lot more coverage for your buck. Not the case, of course, for those who are older or sick/with pre-existing conditions, where COBRA is sometimes the only alternative.

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avatar jillianb ♦275 (Nickel)

My other half went though the same decision a few months ago but after a lay-off. COBRA turned out to be much more expensive than getting an individual plan.

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avatar Bobka ♦13 (Newbie)

When I left my job, I also had the option to continue vision care insurance. Like dental insurance, it was a more of a prepaid plan. The glitch came when I found myself having to repeatedly return my glasses to be remade because the insurance company required by contract that my doctor use a single inept optical lab. After many months and letters and pleas both from me and my doctor, the insurance company finally relented and allowed the doctor to use his regular lab to make my lenses. The result was a first rate quality pair of glasses made and returned to me in one business day. Needless to say, I immediately dropped the vision insurance, and the cost of my glasses is now annually about equal to the amount I was paying in insurance premiums..

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avatar Susan ♦120 (Cent)

In my neck of the woods you can join a local Chamber of Commerce as an individual member. By doing so, you have access to any group insurance they offer. Many of the small businesses and individuals band together and purchase group plans for coverage – I have wonderful insurance through them that is as good as my employer was offering. My individual membership at the Chamber costs a little over $150 a year – well worth it for the medical, dental, and life insurance offerings.

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avatar eric ♦1,549 (Half-Dollar)

Glad it worked out with COBRA. When that expires, I guess we’ll look forward to hearing how you shop for new insurance!

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avatar 4hendricks ♦248 (Cent)

I left a full time job 8 years ago and took COBRA for the first year to cover my pregnancy with my 2nd child – premiums were high, but as the total bill to have this child was $26,000.00 it was worth it. Now we have very bad insurance – anything worth having is way out of our price range.

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