Taking the Bite Out of Cobra

INDIVIDUAL HEALTH INSURANCE MAY BE A BETTER CHOICE, SAYS LEADING EXPERT

April 9, 2009

As of March 1, employees who lost their jobs, through no fault of their own, will be entitled to a 65% federal subsidy for up to nine months, on their monthly COBRA payments. Initially, this may be a good deal, but start looking around for individual health coverage, as there may be additional savings if you do your homework, says Frank N. Darras, the nation's leading disability and long-term care insurance lawyer.

The cost of COBRA can be relatively expensive because even as a terminated employee, you are paying for the "group" policy of everyone at your former company. Those rates can be high because of factors such as demographics, the health plan's design and the company's group health premiums that consist of a composite average. See www.darrasnews.com.

"When you have to tighten your belt and you are looking at ways to save money, carefully research different individual health plans," says Darras. "If you are in good health and have some money set aside, you may want to find a carrier who provides standard coverage, and a choice of deductibles. If you have enough savings to cover a high deductible in the event of a catastrophic circumstance, choose the high deductible and pay lower premiums to get you through."

If you plan to get an individual policy consider if you or family members have any pre-existing conditions. Determine whether you have already, this year, paid your maximum out-of-pocket expenses. In either case, if the answer is yes, keeping the COBRA may be your best bet, says Darras.

"Reviewing your own situation and evaluating your family's expenses, along with their health history will lead you to a well-educated decision. Just because COBRA is offered, does not mean it is the best deal or that you have to keep it," says Darras.

Be a smart shopper and always get competent advice from a trusted advisor. Make sure your new policy is in effect before canceling the COBRA coverage, says Darras.