COBRA vs Marketplace Insurance: A Surgeon’s Perspective
May 26, 2024
5 min read
By Dr. Steff
Surgeon. Humbled to serve.
According to the Bureau of Labor Statistics, 6.5 million people were unemployed in April 2024, and “the unemployment rate has remained in a narrow range of 3.7 percent to 3.9 percent since August 2023 [to April 2024].”1
The termination of health insurance comes along with job loss. It is often challenging to figure out one’s next steps, esp. for health insurance. Not all Americans qualify for Medicare and Medicaid, so some individuals may opt between COBRA (Consolidated Omnibus Budget Reconciliation Act) continuation coverage and Marketplace Insurance.
DEFINITIONS
What is COBRA continuation coverage?
It is the continuation of your current health insurance, which was covered by your employer prior to the end of employment. There is usually a 60 day window for you to enroll, and coverage lasts for about 18 months (or 36 months depending on your circumstances).
What is Marketplace Insurance?
Based on your state of residence and income, you may be eligible for discounted or subsidized health insurance that is available for your state’s residents. Each state has its own website and phone number for you to call and enroll. There are various plans offered at affordable rates at the Marketplace in comparison to COBRA.
FACTORS TO CONSIDER
How healthy are you?
Many younger Americans have fewer medical expenses because they are relatively healthy. If your medical bills are mostly non-existent, consider Marketplace insurance, which tends to be less expensive than COBRA continuation coverage.
Are you conservative in the way you carry yourself through life and play it safe?
Even if you are healthy, life events can happen unexpectedly. Car accidents, cancer, and chronic illnesses such as Diabetes are examples of when sudden expenses can be quite costly out-of-pocket. Based on certain published data, the cost for cancer treatment, for example, can be as much as double out-of-pocket for those who are uninsured than for those who are insured.2, 3
If you are one to prepare for the worst-case scenarios, then you should consider COBRA coverage. Your employer who provides health insurance under COBRA tends to have broader lists of medications and services that are covered. Your lists of specialists, on the other hand, may be narrow, but the amount paid for their services and treatment are typically higher, so your out-of-pocket costs will be lower.
What is the most budget friendly: COBRA continuation coverage or Marketplace insurance?
Definitely the Marketplace insurance options! There is a wide range of policies to select, and based on your selection, your premium will vary.
If you have multiple health issues that require extensive testing or chronic medication, you may get a better rate for these tests and treatments through COBRA than the marketplace, so it’s better to do the math to compare your Marketplace options and COBRA prior to enrollment.
Is there a drawback to Marketplace insurance versus COBRA continuation coverage?
Marketplace insurance provides minimal essential coverage based on the requirements of the Affordable Care Act. Not all treatments and recommendations by your doctor may be covered fully or even partially, so it is important to work with your doctor to ensure that she selects the appropriate substitutes for medications, for example, that can be safely used for your care.
What if I need impending surgery?
The biggest expense that one can incur can be for an operation. Some operations are planned while others are not. For those surgeries that are planned (such as joint replacements for arthritis or carpel tunnel release), it is best to speak to both Marketplace and your employer’s COBRA plan representatives to determine which might provide the most coverage. You want to consider the amount of out-of-pocket cost you’ll incur for the procedure as well as pre- and post-surgical care that can include rehab, physical therapy, and special dressings such as VAC dressings.
Of note, COBRA continuation insurance tends to provide the most coverage, but one should confirm since all employer-provided insurance coverage differs.
As for an emergency operation, it is hard to plan for such an unexpected event. COBRA continuation insurance once again tends to provide the most coverage. However, it is always helpful to compare Marketplace plans with your COBRA continuation coverage since each state differs in what coverage is offered.
🔧 Handy Websites for additional information
https://www.cms.gov/files/document/cobra-coverage-marketplace.pdf
- Delves deeper into the differences between COBRA coverage and Marketplace policies.
- Provides a better understanding of the nuances of COBRA continuation insurance.
References
Agency for Healthcare Research and Quality: Medical Expenditure Panel Survey, 2018-2019. Public-use data file and documentation. Retrieved from: https://meps.ahrq.gov/data_stats/download_data_files_detail.jsp?cboPufNumber=HC-216. July 2022.
https://www.fightcancer.org/policy-resources/costs-cancer-among-uninsured-people-0#fn2