Is cobra or short-term health insurance better?
Asked by: Maryam Collins MD | Last update: March 8, 2025Score: 4.8/5 (7 votes)
What is the difference between COBRA and short term medical insurance?
Short term is really designed to cover big ticket items.
Cobra on the other hand is generally comprehensive depending on the group plan that was in place before. This is likely ACA compliant with coverage for office, medication, lab, maternity, and full list of Essential health benefits dictated by law.
What are the disadvantages of COBRA coverage?
- COBRA can be expensive, especially compared to the premiums you were paying before your qualifying event. ...
- COBRA does not apply to all employer-sponsored health plans—in particular, those organizations with fewer than 20 employees may have no requirements. ...
- Even if you get an extension, COBRA is only temporary.
Is it a good idea to get short term health insurance?
Short-term health insurance is an affordable, flexible option for those needing immediate, temporary coverage. However, it comes with significant limitations, including exclusions for pre-existing conditions and essential health benefits.
Is there a better option than COBRA?
Marketplace insurance, available through the Affordable Care Act, often offers more affordable premiums than COBRA. The cost difference can vary based on the chosen plan, location, and income, as subsidies may reduce premiums for marketplace plans.
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What is the largest disadvantage 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.
Is COBRA even worth it?
While it may seem like a lot of money, COBRA may actually cost you less than what you'll pay on the open market. That's because you may still get your former company's group discount. You can also use a health savings account (HSA) to pay for your COBRA premiums. They're considered a qualified medical expense.
How long can you stay on short-term health insurance?
Short term health insurance is also called short term medical insurance, temporary health insurance or term health insurance. It can help fill gaps in coverage if you're in-between health plans. With short term plans, you can get fast, flexible coverage for up to 4 months in a 12-month period.
How much does Cobra cost?
COBRA insurance typically costs 102% of the total health plan premium. This includes both the employee and employer contributions, along with a 2% administrative fee.
Why would you take out short term insurance?
Short term insurance is a financial guardrail against unexpected misfortunes where your insurer will pay for repairs or replacement, or a lump cash sum, if you claim against a short term insurance policy.
What is not covered under COBRA?
COBRA also does not cover plans that provide only life insurance or disability benefits, as those benefits are not considered “medical care.”
Is COBRA cheaper than marketplace?
Both COBRA and ACA Marketplace plans have their advantages. COBRA lets you keep your exact employer-based plan but is often more expensive. ACA plans may be more affordable, especially with subsidies, but require choosing a new plan. The best choice depends on your financial situation and healthcare needs.
Does COBRA affect your taxes?
There isn't necessarily a “COBRA Tax Deduction”. You can only deduct the amount of COBRA medical expenses on your federal income tax in excess of 7.5% of your Adjusted Gross Income and then only if you itemize deductions.
How long can I stay on COBRA health insurance?
While COBRA is temporary, in most circumstances, you can stay on COBRA for 18 to 36 months.
Who pays for COBRA after termination?
COBRA and Cal-COBRA
COBRA allows former employees, retirees, and their dependents to temporarily keep their health coverage. If you get COBRA, you must pay for the entire premium, including any portion that your employer may have paid in the past.
Can I keep my health insurance if I quit my job?
One of the first health insurance programs to take a look at when thinking about quitting your job is the Consolidated Budget Omnibus Reconciliation Act, or COBRA. COBRA allows you or your family to remain on the same plan that was provided to you by your employer, even after leaving your job.
How much does my employer pay for my health insurance?
In 2022, the average share employers contributed toward group health insurance premium costs was 73% for family coverage and 83% for single coverage. This equated to $16,357 annually for family coverage and $6,584 annually for single coverage per employee.
Can I refuse health insurance from my employer and get Obamacare?
Obamacare is available to everyone, whether or not their employers offer insurance. From a practical standpoint, though, there are financial consequences to doing this. Often, an employer subsidizes part or all of their employees' coverage.
What is the downside to short-term health insurance?
If your health situation changes, it's possible you won't qualify. That's one of the biggest downsides of short-term health plans -- they don't have to cover pre-existing conditions. Short-term health plans have a lot of limitations: Plans require medical underwriting.
Why is short term insurance so cheap?
Since short-term plans do not have to cap patient out-of-pocket costs like ACA-compliant plans, they can be purchased with very high deductibles and lower premiums. Dollar limits on coverage. Short-term plans can and generally do impose annual limits on benefits, which results in lower premiums.
What does short term insurance not cover?
For example, short-term policies can exclude coverage of pre-existing conditions. Short-term policies also typically do not cover essential health benefits such as prescription drugs, mental health care, substance abuse treatment, or maternity care.
What are the disadvantages of cobra insurance?
The primary concern with COBRA is the cost. Paying the full premium can be a significant financial burden, especially during a period of job loss. Here are some potential drawbacks to consider: High Cost: COBRA premiums can be expensive, particularly if you have a family plan.
Is there a better alternative to COBRA?
If you can't afford COBRA continuation coverage, the ACA (Affordable Care Act), also known as Obamacare, is the best and most affordable option. Employees who lost their jobs can enroll in an Obamacare plan via the Marketplace during the open enrollment period that runs from November 1st through December 15th.
What is the monthly rate for COBRA?
Based on plan and state, COBRA costs range from about $400 to $700 per month and are based on the following: Your previous monthly insurance contribution. Your recent employer's monthly insurance contribution.