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COBRA and HDHP


Guest Spankyjumunkwa

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Guest Spankyjumunkwa

Hi everyone,

I've perused the forums a bit, and there's a lot of good information out there, but I haven't found exactly what I'm looking for. I participate in an HDHP that is self-funded by my employer. If my emplyment changes such that I have a "qualifying event", and qualify for COBRA, how can I find out how much COBRA coverage will cost me?

I don't pay anything as a permium as part of my HDHP, and my employer only pays claims, they don't pay a premium either.

If you need more information to help answer my question, please feel free to ask. I appreciate any and all help!

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Ask your employer or the 'plan administrator' what the COBRA cost would be. The plan administrator should be listed in the plan summary you were supposed to have been provided (unless your employer is governmental).

John Simmons

johnsimmonslaw@gmail.com

Note to Readers: For you, I'm a stranger posting on a bulletin board. Posts here should not be given the same weight as personalized advice from a professional who knows or can learn all the facts of your situation.

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Guest Spankyjumunkwa
Ask your employer or the 'plan administrator' what the COBRA cost would be.

Thanks, but asking my plan administrator may provide information that I don't exactly want to broadcast at the moment. Here's my thought, but it sounds almost too good to be true.

I pay no premiums, and my employer pays no premiums. My employer only pays anything if there is a claim. I presume that there are probably some administrative costs that are part of the plan, which would be passed on to me under COBRA. And the claims that my employer would normally pay would also come to me under COBRA. However, and this is the part that sounds too good to be true, is that under an HDHP, I have to pay everything up to the out-of-pocket maximum anyways. Once I hit that point, then the insurance company pays the claim. So the HDHP works the same way under COBRA and under normal circumstances, and in the end, it doesn't make any difference to me.

To run through a hypo, as I understand this, let's say that I have a $6000 out of pocket max and am under COBRA. I make it through the entire time period without a single claim, and I would have coverage but not pay anything for it. On the other hand, if the catastrophic happens, and I have a $20,000 claim, then I'm still only responsible for the $6000 out of pocket maximum, which I can pay with my HSA.

Does it sound like I'm understanding this the right way? Because like I said, it certainly sounds too good to be true.

I appreciate the response.

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The coverage of expenses that exceed $6,000 is the the coverage that is self-funded by the employer and which you are not paying for now. If you elect COBRA, the employer is allowed to charge you the cost of coverage under the group plan for the continuation period. So if you want the coverage for the possibility of health expenses over $6,000 per deductible year, you will have to pay your employer an amount, and it is that amount--the COBRA continuation coverage premium--that you do not know.

If you do not elect and pay for COBRA continuation coverage, the old employer is not going to pay your health expenses to the extent that they exceed $6,000 per deductible year.

John Simmons

johnsimmonslaw@gmail.com

Note to Readers: For you, I'm a stranger posting on a bulletin board. Posts here should not be given the same weight as personalized advice from a professional who knows or can learn all the facts of your situation.

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Guest Spankyjumunkwa

Ok, that makes a little more sense, although I may not have understood everything you said. I'm a bit new to all of the in-depth insurance questions. Normally, it's a pay and forget sort of thing, probably like most people. But I am trying to learn.

So if I elected COBRA under this, then I would owe any amounts over $6,000, which is my out of pocket maximum. If I would owe everything on top of that, then there really isn't a point in me taking the COBRA, since I would be responsible for everything before my OOP Max, as well as everything after it. So I'd be better off trying to qualify for Medicaid or another state program instead of taking the COBRA coverage.

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The value of the COBRA continuation coverage is that you get a group rate for the cost of coverage rather than have to pay your actual costs in excess of $6,000.

Suppose that actuarially it is determined that the cost for 2010 that the employer will pay under the self-funded plan boils down to $4,800 per employee. Your 'premium' cost under COBRA could be 102% of that group rate. That it, your COBRA continuation coverage would cost you $408 per month ($4,800/12=400.00; 400.00X102%=$408).

If your health expenses over $6,000 are for the year $30,000, you'd have paid just $4,896 rather than bear the expense of that $30,000. Your former employer would be picking up the rest of the tab.

John Simmons

johnsimmonslaw@gmail.com

Note to Readers: For you, I'm a stranger posting on a bulletin board. Posts here should not be given the same weight as personalized advice from a professional who knows or can learn all the facts of your situation.

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Guest Spankyjumunkwa

I think the light bulb came on this morning after I had a chance to sleep on it. I at least feel better because what sounded too good to be true was, in fact. Now, I've just got to consider whether it's worth picking up the COBRA and hoping that I don't have to use it.

Thank you very much for helping me to get my head around this one. It's very much appreciated.

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