When to Leave COBRA and Switch to a Self-Employed Health Plan
COBRA is expensive but sometimes correct. Here is how to tell which situation you are in.
COBRA usually lasts eighteen months and costs the full premium plus an administrative fee of up to two percent. The question is not whether it is expensive. It is whether leaving costs you more than staying.
Reasons to stay
You are mid-treatment, or have a procedure scheduled, or are most of the way through your deductible for the year. Switching resets the deductible to zero and can disrupt a course of care with a provider who is not in the new network. Those situations regularly justify several more months at a painful price.
Signs it is time to move
You have confirmed your doctors are in the new plan's network. You are not mid-treatment. You are early enough in the calendar year that resetting the deductible costs you little. And you have checked that any regular medication is covered rather than discounted.
Timing the handover
Group plans through Benefit Airship start on the 1st of a month, and you have to enroll by the 15th of the preceding month to make that date. Enroll after the 15th and you wait an extra month. Keep COBRA paid until the day your new coverage begins; do not cancel it in advance and gamble on the dates.
Do the arithmetic on a full year
Take your COBRA premium for twelve months. Then take twelve months of the new premium plus a realistic estimate of what you would pay out of pocket under its deductible and copays. Compare those two totals. Sometimes the gap is large and obvious; sometimes it is small enough that keeping your existing doctors is worth more than the difference.