COBRA Update: Projecting Health Care Bills

In making a choice between COBRA options (following Tom's lay-off), we discovered that the two plans' coverage works out to "a wash" in most scenarios. The plan with a high deductible (and therefore lower premiums) requires more paperwork on the consumer's part but carries the potential of savings if health care bills are low (less than the amount of the deductible of $3000).

Our approach was to try to project health care bills for 2009. Tom phoned his cardiologist's office to see what he could learn. A nurse returned his call to report on what his next visit would involve. Reluctant to name prices, but encouraged by Tom to estimate based on typical charges, she outlined these potential costs: $1000 for the echocardiogram and $2200 for the nuclear stress test.

That amount of detail was enough; no need to estimate labs or any other miscellaneous costs. After the deductible, the two plans and their premiums work out to the same overall benefits, and Tom learned that he will surely exceed the deductible of the lower-premium plan. That means the "regular" plan is the better choice because it is paperwork-free.

So, Tom's individual COBRA cost will be $608/month. The break-down: $545 for medical, $62 for dental.

Tom was lucky in his lay-off in that his COBRA costs were covered "free" by his employer at the start. Not all unemployed workers have that luck and so must pick up their own COBRA premiums immediately. Regardless of the timing, though, one cannot help but compare medical insurance costs with unemployment checks; for Tom, COBRA will now be almost half of the unemployment check. (Obviously, a younger person may see a smaller percentage of the unemployment check needed for medical insurance.)

© 2008 Mary Bold, PhD, CFLE. The content of this blog or related web sites created by Mary Bold (www.marybold.com, www.boldproductions.com, College Intern Blog) is not under any circumstances to be regarded as professional, legal, financial, or medical advice. Or education advice. Or marital advice. Or even a tip.