Is COBRA Insurance Worth The Cost?

This post starts the Insurance section of the How To Live Totally Free plan. Now this section is quite important to Americans because we don’t have government-provided healthcare for a majority of citizens. So if you’re not eligible for Medicare or Medicaid then you usually get your health insurance from your employer or purchase a private plan. If you lose your employer’s coverage for any reason you can elect COBRA. However, it’s quite expensive. So is COBRA insurance worth the cost? Let’s review the pros and cons.

Is COBRA Insurance Worth The Cost? It Is If You Have An Expensive Chronic Illness

If you have an expensive chronic illness then you may save more money purchasing an expensive COBRA plan than purchasing private health insurance. That’s because many employer health plans have better benefits than private insurance companies. Thus, you can save more money paying both the monthly premium and any copays and/or deductibles.

In addition to the savings over private insurance, if you already met the yearly deductible, and there are months left before the end of the year, then COBRA would be worth the cost. You already paid hundreds if not a thousand or two to meet the deductible and if you change plans then you lose all that progress (and money).

Is COBRA Insurance Worth The Cost? It Is If You Have An Expensive Procedure Coming Up

Another reason to purchase COBRA insurance if you have an expensive procedure coming up. You could be pregnant or a family member is going to surgery. You really have to compare the benefits you have with your employer’s plan with private health insurance. Not only will the deductible usually be higher with the latter, but you may find private insurance plans can pay for less days in the hospital or not cover certain treatments.

You don’t want to skip COBRA because it’s quite expensive only to find that you have to pay more money on the private health insurance plan. I rather you purchase COBRA for a few months to cover the expensive procedure then get a cheaper, replacement plan.

Is COBRA Insurance Worth The Cost? Is Isn’t If You Don’t Use Your Health Insurance Much (If Not At All)

Now COBRA isn’t worth purchasing if you don’t use the health insurance much, if not at all. You could be a healthy individual and don’t go to the doctor often. I find myself in this position. For people like this we will waste quite a bit of money for unused coverage. So what should we do instead? Consider purchasing the cheapest private health insurance coverage you can find.

I like to purchase a health insurance plan with a high deductible because the monthly premium is lower. Also, I view this plan as one if something devastating happens to me, like if I get cancer or in a bad accident. These treatments would easily meet the high deductible.

Finally, You Could Always Purchase Only The Dental And/Or Vision Coverage

With COBRA you don’t have to purchase the health, dental, and vision. You can elect only the dental and/or vision and pay for that. I’ve done this before because the coverage under my employer’s plan was better than what I found on the private market.

If you go this route then you only have to purchase medical insurance which could mean less money out of your pocket.


If you miss any of the posts of the How To Live Totally Free series you can find all the posts here.

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