There’s a common understanding that COBRA is expensive.
Here’s the scenario. An employee leaves their job for any number of reasons and soon gets a COBRA packet in the mail. Surprise! To keep the health insurance benefits they once had at their job, they’re asked to pay so much more than they were paying on the job.
But is COBRA really expensive? Sort of.
The reality is that Health Insurance is expensive. COBRA is simply a reflection of the true cost of the Health Insurance.
So why the jump in price?
During employment, the employee and the employer share in the cost of Health Insurance. But once the employee leaves, the Employer is no longer required to pay their portion, leaving the entire Health Insurance premium to the ex-employee. (There’s also a small processing fee added)
Why the sticker shock? The “blame” falls squarely on the shoulders of a very generous employer. Most employees never realize that their employer is paying a huge portion of the their Health Insurance premiums. Employees generally assume that the money coming out of their pay check is paying for the entire Health Insurance premium. Because most employers never properly explain this, there’s a general ignorance to the true cost of Health Insurance.
In the end, COBRA is expensive because Health Insurance is expensive. If COBRA premiums are not affordable, one should speak with a licensed insurance professional on other options.