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Why Does COBRA Insurance Coverage Cost So Much?

Armen Hareyan's picture

A survey published in today's WashPost about the COBRA Unemployment Health Insurance Coverage finds it too costly and not really affordable for the unemployed people. Families USA has published the report and the release is published at eMaxHealth, titled COBRA Premiums Consume 84 Percent of Unemployment Benefits.

When a person loses his or her job for any reason, and fears the subsequent loss of their health insurance coverage, COBRA mandates that they have the chance to keep the coverage intact. But why does COBRA Coverage cost so much?

COBRA stands for the Consolidated Omnibus Budget Reconciliation Act. It was a sweeping bit of legislation that covered a host of different issues. One of them was to give protection to people who have lost their jobs, for whatever reason. Since so many people were depending on Group Health plans at their place of employment, a loss of employment could lead to a loss of coverage and dire consequences. It was also possible that an employer could fire an employee who might be facing a major illness just to ease the pressure on the Group and hold down premiums.

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COBRA prevented this potential abuse and required Group Plans to extend coverage to discharged employees. There were certain time restrictions and regulations, but the former employee could continue to pay for the insurance and there would be no break in coverage. It was a good plan, but most people were shocked when they received the bill for the continued coverage. The cost was very high, and many people are unable to afford to pay it. This is especially true of fired or laid off employees who have other financial priorities greater than health insurance to concern them.

These high payments caused a great deal of resentment toward the Insurance Company. The policy holders felt that the premiums had been raised to such an extreme in an attempt to force the policy holder to give up his coverage. This is not the case at all. It is another example of how the Insurance Companies are taking the blame for something they are unable to control. The culprit is the high cost of Medical Care in the United States.

Most employees who are smarting under the strain of high health insurance premiums are totally unaware of how much their employers are contributing toward their plans. Employers try to tell the employees this in most cases, but it is a fact of human nature that most people are a bit unconcerned about who is paying what as long it is not them. The employer is no longer obligated to pay their portion of the premiums, and the individual is now paying for the entire cost. The premium is not any higher.

This information is little consolation to the poor insured person facing a large premium to keep his coverage in force. It is important that he understands that this is going to happen and be prepared for it when considering a change of employment. The Insurance Company is not the enemy here, but can be the ally. Your Insurance agent can lead you to an alternative health plan that may be much less expensive than the continued COBRA coverage.

Get quotes for California individual health insurance plans online at www.UFCAmerica.com.