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Cheap Medical Insurance | Cheap Health Insurance Through A COBRA Sponsored Plan Posted: December 4th, 2009

By Kelly Richardson

Kelly C. Richardson, MEd is a freelance writer with over 15 years of experience and a digital entrepreneur. He's written for Fortune 500 companies, Google, Yahoo!, Microsoft and Wells Fargo.

If you work for a company that provides cheap medical insurance, you've probably heard of COBRA. But what does it mean? Is it cheap health insurance--or are there other options?

Is COBRA Truly Cheap Medical Insurance or Are There Other Options?

COBRA is the acronym that stands for Consolidated Omnibus Budget Reconciliation Act of 1985. COBRA offers you the opportunity to temporarily continue your group health care insurance, under your former employer's plan, should your coverage stop because of termination, layoff, or other change in your employment status. However, COBRA follows a strict set of rules that may change your coverage from cheap medical insurance to health insurance with a more substantial cost.

From Cheap Health Insurance to COBRA

Under a traditional plan, your employer helps you cover the cost of health insurance. Company-sponsored health coverage is among the cheapest medical insurance available. However, a qualifying event--such as termination or layoff--and the cost of insurance can jump to 103% of your current coverage cost. A November 2009 article from Insurance News Net, cites a Kaiser Family Foundation study that revealed that monthly premiums could jump to $1,078 a month for the average family.

The Obama Administration Offers Help

According to an article by Michelle Andrews in U.S. News & World Report, the Obama Administration plans to offer subsidies to offset the jump in costs from employer-sponsored programs to COBRA. President Obama's economic stimulus bill may cover 65% of COBRA costs for 9 months for qualifying employees. To fit the program requirements, you have to make less than $125,000 for individuals and $250,000 for families. If the legislation is passed intact, 7 million people would be able to keep their health insurance. Opponents still point to the fact that health insurance premiums would still hit the $400 per month mark, even with the government subsidies.

Other Options for Cheap Medical Insurance

If $400 per month still seems high or you are not eligible for the government subsidy, there are other options you can investigate:

  • Children's Health Insurance Program (CHIP). CHIP is a federal-state partnership providing insurance for children in families who are ineligible for Medicaid but can't afford private insurance
  • A Hybrid Plan. If your partner has a chronic condition, continue COBRA for that spouse and buy an individual policy for yourself
  • Find a Part-time Job. Some part-time jobs offer health coverage that you can use to offset expenses

Even if COBRA doesn't work for you, there are other ways to meet your medical coverage requirements. Additionally, COBRA may not be the cheapest health insurance, you may come out ahead by obtaining individual coverage.

Kelly Richardson