• (888) 505-7724
  • updates@sbmamec.com
  • Employer Portal
  • Employee Portal
SBMA Benefits
  • Facebook
  • Instagram
  • LinkedIn
  • Mail
  • Services
  • Benefit Plans
  • Employees
  • Employers
  • Resources
    • Compliance Updates
    • No Surprises Act Resource Page
    • COVID-19 Vaccine & Testing Updates
    • SmithRx Formulary
    • COBRA
    • At-Home COVID-19 Tests
  • News & Insights
  • Contact SBMA
  • Search
  • Menu Menu

Pros and Cons of COBRA vs. Private Health Insurance

When seeking out health insurance coverage past when it’s partially covered by your previous employer, how do you choose between picking COBRA or private health insurance? Both have pros and cons. The right choice, however, depends on your unique circumstances.

Let’s discuss the pros and cons of COBRA vs. private health insurance.

What is COBRA?

The Consolidated Omnibus Budget Reconciliation Act (COBRA) is not insurance itself. Alternatively, COBRA is a law that was passed in 1985.

This law, COBRA, allows employees to continue on their existing health insurance plan if:

  • They are reduced to work less than 30 hours a week, or
  • Leave their job voluntarily or involuntarily

Under COBRA, the employee continues on his or her insurance plan but is then responsible to cover the entire cost. It is no longer the employer’s responsibility to cover health insurance premiums as they had previously.

COBRA, however, is not available to everyone. COBRA is only available to employees who worked at a public or private company with 20 or more employees.

What is Private Health Insurance?

Private health insurance, on the other hand, is any health insurance policy plan that is not run by a government-run insurance plan (i.e. Medicare, Medicaid, Obamacare).

This type of coverage, though not government-run, must comply with state and federal insurance regulations.

Depending on the type of insurance policy, regulations include: 

  • Affordable Care Act (ACA) essential health benefits
  • Maternity care
  • Meeting minimum essential coverage (MEC) requirements
  • Providing minimum value to avoid employer mandate penalty
  • Capping in-network and out-of-pocket costs
Learn more about Affordable Benefits, talk with one of our team members!

Pros and Cons of COBRA

Pros of COBRA

  • COBRA allows you to keep your same health insurance policy in the event you lost your job voluntarily, involuntarily, or through a reduction of work hours.
  • COBRA is an added security in case an unexpected life event occurs while you are unemployed.
  • Beneficiaries continue the same coverage for preexisting conditions and prescription drugs.
  • With COBRA offering an extension of your health coverage, you don’t have to pay for medical expenses out of pocket (i.e. doctor’s visits). Instead, you are still privy to the same group rate as the one you had with your previous job.

Lastly, you can use COBRA coverage for 18 to 36 months depending on why you need it. Plus, it can be extended depending on qualifying events.

Cons of COBRA

  • COBRA coverage is not cheap. Why? Because you’re now responsible for paying your portion of your health insurance: The cost your employer contributed to your premium, in addition to the 2% service fee on the cost of your insurance.

A COBRA premium can cost on average $400 to $700 a month per person.

Calculate the Cost of COBRA

In order to calculate the cost of COBRA continuation coverage, add how much the employer contributes to the health plan, plus how much the employee contributes to the health plan, then multiply the sum by 2% for the service fee. 

Please see the formula below:

(Employer contribution to coverage + Your Contribution) x 0.02% = COBRA Premium)

For example, an employer who contributes $400 a month for an employee who contributes $200 a month would bring the total to $600 towards contributions. Multiplied by the 2% charge, the COBRA cost each month would cost $612 each month.

there are pros and cons to cobra insurance

Pros and Cons of Private Health Insurance

Pros of Private Health Insurance

  • If you use private health insurance, you have the flexibility to choose a policy that works best for you. 
  • In addition to building your own policy, sometimes you can also choose your own physician.
  • Those who choose to use this type of health insurance coverage are also privy to greater coverage options and flexibility, shorter wait times, and better facilities

Cons of Private Health Insurance

  • Private health insurance is even more expensive than COBRA. Some policies may only cover up to 80% of the cost of care.
  • Private health insurance may offer limited coverage options depending on disease and condition.

Insurance premium costs are on the rise and show no sign of slowing down. As time goes on, the price of private health insurance is expected to continue increasing. Research found the national monthly average of insurance costs in 2022 sat at $541.

there are pros and cons to private health insurance

The Bottom Line

Both COBRA and private health insurance will help provide the security of having health insurance if you no longer have access to employee benefits. Weigh the pros and cons of each to see which policy fits your needs best.

Still have questions? Reach out to our expert team of brokers and visit our COBRA page to learn more.

Search

Categories

LATEST NEWS IN ACA COMPLIANCE

  • Full-Time vs Part-Time Benefits:Full-Time vs Part-Time Benefits: Why It MattersJanuary 1, 2023 - 7:00 am
  • Affordable care act ACA or Obamacare and stethoscope.Received an ACA Penalty from the IRS? Here’s What to DoDecember 25, 2022 - 12:25 pm
  • affordable care act requirementsACA is Here to StayNovember 20, 2022 - 8:00 am

Archive

CONNECT WITH US

USEFUL LINKS

EMPLOYER PORTAL
EMPLOYEE PORTAL
PRIVACY POLICY 
THE BLOG

CONTACT SBMA

888-505-7724
UPDATES@SBMAMEC.COM

HOURS

Mon – Fri: 7:00am—5:00pm (PST)
Sat: CLOSED
Sun: CLOSED

FOLLOW US

© SBMA 2022 – all rights reserved

site designed by digitalstoryteller.io

© SBMA 2021 – all rights reserved
site designed by digitalstoryteller.io

Tips to Combat the Negative Effects of SittingSitting has been dubbed the “new smoking.” Add walks throughout your day to combat the negative effects of a sedentary life.Top 5 Reasons to Use Telehealth Scroll to top

This site uses cookies. By continuing to browse the site, you are agreeing to our use of cookies.

Accept settings

Cookie and Privacy Settings



How we use cookies

We may request cookies to be set on your device. We use cookies to let us know when you visit our websites, how you interact with us, to enrich your user experience, and to customize your relationship with our website.

Click on the different category headings to find out more. You can also change some of your preferences. Note that blocking some types of cookies may impact your experience on our websites and the services we are able to offer.

Essential Website Cookies

These cookies are strictly necessary to provide you with services available through our website and to use some of its features.

Because these cookies are strictly necessary to deliver the website, refusing them will have impact how our site functions. You always can block or delete cookies by changing your browser settings and force blocking all cookies on this website. But this will always prompt you to accept/refuse cookies when revisiting our site.

We fully respect if you want to refuse cookies but to avoid asking you again and again kindly allow us to store a cookie for that. You are free to opt out any time or opt in for other cookies to get a better experience. If you refuse cookies we will remove all set cookies in our domain.

We provide you with a list of stored cookies on your computer in our domain so you can check what we stored. Due to security reasons we are not able to show or modify cookies from other domains. You can check these in your browser security settings.

Google Analytics Cookies

These cookies collect information that is used either in aggregate form to help us understand how our website is being used or how effective our marketing campaigns are, or to help us customize our website and application for you in order to enhance your experience.

If you do not want that we track your visit to our site you can disable tracking in your browser here:

Other external services

We also use different external services like Google Webfonts, Google Maps, and external Video providers. Since these providers may collect personal data like your IP address we allow you to block them here. Please be aware that this might heavily reduce the functionality and appearance of our site. Changes will take effect once you reload the page.

Google Webfont Settings:

Google Map Settings:

Google reCaptcha Settings:

Vimeo and Youtube video embeds:

Other cookies

The following cookies are also needed - You can choose if you want to allow them:

Privacy Policy

You can read about our cookies and privacy settings in detail on our Privacy Policy Page.

Accept settings