Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) is a program that enables an employee to continue the coverage in case of being unemployed. The COBRA health insurance cost will be shouldered by the policyholder at his or her own expense to retain the coverage of the policy plan provided by the previous employer. The cause of the dismissal should be eligible based on the provisions under the program to continue the coverage.
Qualifying events to avail COBRA:
- Termination for any reason except for cases like gross misconduct
- Reduction of working hours
- Eligible for Medicare coverage
- Family-related events such as divorce or legal separation
- In case of death
Employers with at least 20 employees and operating at least 50% of the fiscal year are required to comply to provide COBRA coverage. Group health plans are mandatory as benefits of full time and part-time employees as health maintenance including family members.
Average COBRA Insurance Rate
As a covered employee, the company covers the 90% of the insurance plan and the remaining 10% is deducted in the monthly salary. Under COBRA, the covered employee must pay the 100% COBRA health insurance premium plus the 2% administrative charges. Therefore, the COBRA insurance can be expensive to continue but there are a lot of available options in the insurance market to choose from.
Under a private insurance company, the average employer-sponsored coverage is around $1,137 per month for family coverage and $410 per month for an individual coverage which is according to the report provided by the Kaiser Family Foundation (April 2010). Meanwhile, if the employee is subsidized, the average COBRA insurance rate is at $398 per month for a family plan and $144 for an individual plan.
But on their 2017 employer health benefits survey, the average annual premiums for employer-sponsored health insurance is about $6,690 for single coverage and $18,764 for family coverage (with a range of $15,011 to $22,517). For the overall average for all plan types, the average annual premium is around $6,024 for single coverage and $17,581 for family coverage.
Meanwhile, for employers with low-income workers, the average annual premium is around $1,213 for single coverage and $5,714 for family coverage. Also for the deductibles, according to the survey, covered employees pay an out of the pocket during claim with an average of $1,505.
Average based on Value Penguin
The data is based on a parameter of the average rates paid by 21 years old employees for health insurance coverage. Older consumers are expected to pay higher rates depending on the scaling of the age. Employees with an age of 30 years old, 40 years old, and 50 years old are expected pay an increased rates to their monthly premiums by at least13.5%, 30%, and 78.6% respectively. Meanwhile, for 64 years old above employees, they might pay rates 3 times the cost listed in the table below.
| Monthly and Annual Health Insurance Rates by State | |||||
| State | Monthly Health Insurance | Annual Health Insurance | State | Monthly Health Insurance | Annual Health Insurance |
| Alaska | $426 | $5,112 | New Hampshire | $246 | $2,952 |
| Alabama | $217 | $2,604 | New Jersey | $307 | $3,684 |
| Arkansas | $236 | $2,832 | New Mexico | $211 | $2,532 |
| Arizona | $247 | $2,964 | Nevada | $279 | $3,348 |
| Delaware | $255 | $3,060 | Ohio | $258 | $3,096 |
| Florida | $285 | $3,420 | Oklahoma | $209 | $2,508 |
| Georgia | $253 | $3,036 | Oregon | $206 | $2,472 |
| Iowa | $251 | $3,012 | Pennsylvania | $231 | $2,772 |
| Illinois | $244 | $2,928 | South Carolina | $249 | $2,988 |
| Indiana | $276 | $3,312 | South Dakota | $235 | $2,820 |
| Kansas | $196 | $2,352 | Tennessee | $225 | $2,700 |
| Louisiana | $284 | $3,408 | Texas | $239 | $2,868 |
| Maine | $271 | $3,252 | Utah | $180 | $2,160 |
| Michigan | $251 | $3,012 | Virginia | $222 | $2,664 |
| Missouri | $254 | $3,048 | Wisconsin | $280 | $3,360 |
| Mississippi | $234 | $2,808 | West Virginia | $242 | $2,904 |
| Montana | $210 | $2,520 | Wyoming | $366 | $4,392 |
| North Carolina | $270 | $3,240 | |||
| North Dakota | $242 | $2,904 | |||
| Nebraska | $243 | $2,916 | |||
For a state with higher crime rates and prone to natural disasters, the average insurance rate can increase significantly. Also, the coverage can affect the overall cost depending on the tier of the health plan. Bronze has the lowest coverage but with highest deductibles and co-pays while the platinum offers at least 90% coverage of the cost.
| Monthly and Annual Health Insurance Rates by Metal Tier | ||
| Type | Monthly Premium | Annual Premium |
| Catastrophic | $167 | $1,999 |
| Bronze | $201 | $2,411 |
| Silver | $247 | $2,961 |
| Gold | $291 | $3,487 |
| Platinum | $363 | $4,360 |
Therefore, the the monthly premium for a 21 years old employee is around $167 to $426 for single coverage. Meanwhile, for old consumers, they should expect higher rates depending on the calculation provided by the federal government as mentioned before.
Group Health Plan
The group health plan provided by the employer’s HMO or private insurance should at least comply with the minimum coverage based on Employee Retirement Income Security Act rules. The group health plan provided should be intended to maintain the health care of the employees and their beneficiaries. The medical care should include hospital care, physician care, surgery, prescription drugs, dental and vision care.
The continued coverage only refers to health insurance plans which mean that life insurance and disability insurance are not included in the program. Even though, policyholders can upgrade the plan for further coverage but at a higher cost. The duration of the coverage can last up to 18 months or as long as 36 months depending on the qualifying event occurred.
Medicaid
Medicaid is a federal health program that covers the low-income household and people with disabilities. The Affordable Care Act intended to cover adults with incomes that are below the federal poverty level which is around $27,310 for families with at least three members.
The program continues to evolve but with the entrance of the new administration, the future of Medicaid became uncertain due to the plans to repeal the health insurance in the country. As of now, there are at least 32 states that implemented the ACA Medicaid expansion to determine eligible policyholders under Medicaid coverage.
In comparison to low-income class with private insurance, the average premium rate is about 6% of the total household budget while under Medicaid, the average premium rate is 0.4% only of the total household budget. Also, the federal law limits premiums and cost sharing to make the Medicare affordable for the low-income household by capping out of pocket costs to 5% of the family’s income.