Tip 229- COBRA Versus SEP

Thanks to the Consolidated Omnibus Budget Reconciliation Act of 1985, employees (and dependents) have the ability to keep their coverage when they lose eligibility for their employer sponsored group health insurance. It’s called a COBRA election.

Under The Affordable Care Act, that same loss of coverage also triggers a “Special Election Period (SEP)”, when individuals can purchase private insurance without regard to health or pre-existing conditions.

Depending on each individual’s personal circumstances, we’ve seen countless situations where COBRA isn’t the best “deal.”

Take Jane, who as a result of a divorce was offered COBRA at $600/month.

With Modified Adjusted Gross Income of only $28,000 (exclusive of child support, which doesn’t count toward MAGI), Jane qualified for very generous Marketplace subsides. We were able to help her purchase far better coverage for only $180/month.

When considering health insurance options at retirement (especially if you’re not yet Medicare eligible) and, before electing COBRA, individuals would be well advised to visit with a Marketplace certified agent.

I know a few. And they have conveniently located offices!

P.S. Forward this to every HR Manager you know. And then suggest they subscribe for future Tips!