The COBRA Trap; What You Can Do To Escape its Bite

But wasn't COBRA supposed to be helpful?
We can't avoid the scary headlines. Downsizing. Right-sizing. Bailouts.
It all means the same thing; people are losing jobs right and left.
Chances are, if it has not happened to you personally, it has happened to a family member, a neighbor, or a friend. Or will, possibly sooner rather than later.

With the loss of a job comes an eventual loss of group health insurance.
In 1986, Congress enacted, and the president signed, a bill that mandated the continuance of company-sponsored group health care for a period of 18 months following a layoff, for companies employing 20 or more. That COBRA bill certainly protected many who feared the immediate loss of health insurance.

But what lawmakers did not foresee was the crushing financial burden this bill unleashed upon suddenly cash-strapped families.When a family member loses a job, his or her productive cash flow stops entirely, or is reduced through severance packages and state unemployment benefits. But in any case, when faced with a layoff, what does any intelligent family do? It reduces spending, because no one knows how long the unemployment period could last.

The good news is that the COBRA program continues the family's company-sponsored group health care coverage even after the loss of the job.
The bad news is that, in the event of a layoff, you now pay 100% of the program's monthly premium, all by yourself, with less money coming in.

Typically, companies that sponsor group health insurance pay between 90% and 60% of the cost of the health insurance premiums monthly. If you, for example, were paying $100 per month of that monthly premium, it's likely that when your full monthly premium is unleashed upon you to now pay 100%, your monthly premium could jump upward from $300 to $1,000 per month or more. In effect, that portion of your group health insurance that was formerly paid for by your former company, is now being borne and paid for entirely by...YOU.

This next point is absolutely critical to know and understand: IF YOU AND YOUR FAMILY MEMBERS DO NOT SUFFER FROM ANY SERIOUS PRE-EXISTING MEDICAL CONDITIONS, YOU OWE IT TO YOURSELF AND YOUR FAMILY'S FINANCES TO EXPLORE THE BENEFITS AND POTENTIALLY MUCH LOWER COSTS THAT AN AFFORDABLE INDVIDUAL HEALTH INSURANCE PLAN CAN PROVIDE as an alternative to COBRA.

It is not unusual that an affordable individual health plan can cut the cost of COBRA by 25% to 50%. For many families, that savings can provide an enormous boost to their quality of life, at a time it's badly needed.

What's more, you need not suffer any dilution of health coverage. Today's individual and family-centric health plans have advanced a long way beyond the limited benefit plans that were offered a decade ago. Today's individual and family offerings consist of affordable PPO and Health Savings Account (HSA) Major Medical Plans, supported by the largest local and national provider network, making inclusion of your doctor and hospital highly probable. Plans are offered through insurance carriers that are publicly traded companies, and are highly rated by AM Best.

For more information on an affordable individual health insurance PPO plan, Health Savings Account (HSA) plan, or any other health benefit plan, contact John Reynolds, at jreynolds@abbaplans.com, or call 630-254-7950. Illinois-licensed agent.