When an employee leaves California Group health insurance through an employer, he or she may have a Cobra option.  Cobra is extension of the group plan that the individual employee pays for.  Cobra typically runs 18 months and can sometimes extend to a full 36 months through a Cal-Cobra extension.  Many people coming off of group plans want to investigate their options as Cobra can be very expensive (although richer in benefits).  There are some important considerations when comparing your Cobra option with individual family plans on the California health insurance market.  Never lose your Cobra option.  Make sure you receive a written notification of approval for your chosen individual health insurance plan and rate.

Qualify for individual coverage based on health

One of the main differences between Group coverage (including Cobra) and individual health insurance is that you must qualify based on health for individual family coverage.  The carrier can decline coverage based on your health and/or pre-existing conditions.  This is a wake-up call for applicants who have been in employer-sponsored plans all their life and are unfamiliar with being declined for coverage.  If you have health issues, individual coverage might not be a good option as they can decline or increase your rates based on rate Tiers.  At this point, Cobra is likely your better option.

Cost concerns in comparing Individual health insurance with Cobra

Group coverage is typically richer in benefits but also tends to be more expensive.  Employers offer health insurance not only to cover healthcare costs but as a tool to attract and keep good employees.  Due to this, the benefits tend to be richer.  The rates are higher as coverage is guaranteed issue so an employee can come on regardless of health. 

It's very different, however, when you are paying to cover just yourself (as with either Cobra or Individual health insurance).  The monthly premium is being paid regardless of how much you use the plan.  Due to this and the escalating increase of premium as you move up to richer plans, it usually make sense to look at a lower cost, comprehensive plan.  This flexibility to choose your coverage will likely not exist within the scope of Cobra.  A quick example:

If your Cobra plan runs $700/monthly for the family with a fairly rich plan (copays, co-insurance, low or no deductible, etc) and a high deductible family health plan is $300/monthly for a $3500 deductible, the high deductible plans makes sense.  You will save $400/monthly in premium or almost $5000 annually.  That pays for one family member's entire deductible whether you use the plan or not.  In an average year, you save quite a bit in premium savings.  In a bad year, it's most likely a wash as the premium savings makes up for the high deductible you have.  You can choose richer plans but it rarely makes sense to...especially as you get older and premium differences grow significantly.

Future employment options and health insurance

If you expect to have other guaranteed issue group coverage through a new employer, Cobra might be a good interim strategy.  If your future options are more open-ended, individual might be safer.  Let's say you decide work as a contractor (1099) or accept a job with a higher salary but no benefits.  You can wait till your Cobra exhausts (18 or 36 months typically) but if your health changes during that time, the individual health insurance market may not be available anymore.   We see situations where people wait until their Cobra is just about to exhaust to investigate individual family options.  This is very common after retirement for someone who is under the age of 65 (and not eligible for Medicare supplement insurance).  It is usually a rush to qualify for individual health coverage and recent medication or health issues during the Cobra coverage can complicate the process significantly.  If your are healthy...that's the time to apply for individual coverage.  If the Cobra coverage is very inexpensive for richer benefits, then it's tough not to accept it.  If Cobra exhausts and we are unable to qualify for individual health insurance, we are then looking at HIPAA guaranteed issue plans which are expensive and clearly a back-up option.

Split policies between Cobra and Individual insurance

Most people coming off of Cobra do not realize that they can usually elect Cobra for individual family members.  Let's say one family member has health issues.  It might make sense financially to keep that family member on Cobra and get individual coverage for the other family members that can qualify.  You can inquire into the cost for certain family members under Cobra from your employer HR department and/or Carrier.  Investigate to see if splitting your family health plans makes sense.

Other important concepts to help you understand your California health insurance quote are:

Individual health insurance underwriting
Cobra health options
HIPAA guaranteed issue
Understanding health insurance
Split policies with family members


To run your instant health insurance:

California Individual Family health insurance quote
California group health insurance quote