Understanding COBRA and ACA: A Guide for Employees

Navigating the Options After Job Loss

Losing a job can be stressful enough without having to worry about health insurance coverage. The Consolidated Omnibus Budget Reconciliation Act (COBRA) and the Affordable Care Act (ACA) provide different options for continuing health insurance after a job loss. Understanding the differences between these two programs can help you make the best decision for your family’s needs.

COBRA (Consolidated Omnibus Budget Reconciliation Act)

COBRA allows employees who lose their job to continue their employer-sponsored health insurance for up to 18 months. However, COBRA premiums are typically more expensive than ACA plans because employees are responsible for paying the full cost of the premiums, including the portion that their employer previously paid.

ACA (Affordable Care Act)

The ACA provides subsidies to help low- and middle-income individuals and families afford health insurance. ACA plans are typically more affordable than COBRA plans, and they offer a wider range of coverage options.

Can You Elect COBRA After Enrolling in an ACA Plan?

Yes, you can still elect COBRA even if you have already enrolled in an ACA plan. However, you must do so within 60 days of losing your job.

The Affordability Threshold

To qualify for ACA subsidies, your employer-sponsored health insurance plan must be considered “unaffordable.” This means that your employee contribution for self-only coverage cannot exceed 8.39% of your household income. If your COBRA premiums exceed this threshold, you may qualify for ACA subsidies.

Making the Right Decision

The decision of whether to elect COBRA or enroll in an ACA plan depends on your individual circumstances. Here are some factors to consider:

Cost: COBRA premiums are typically more expensive than ACA plans. However, ACA plans may have higher deductibles and out-of-pocket maximums.
Coverage: COBRA plans typically offer the same coverage as your employer-sponsored plan. ACA plans offer a range of coverage options, so you can choose a plan that meets your specific needs.
Eligibility: COBRA is only available for up to 18 months. ACA plans are available year-round.

If you are not sure which option is right for you, it is important to talk to a licensed health insurance agent. They can help you compare plans and find the best option for your family.