Q: My husband is between jobs and has the option to continue his employer insurance through COBRA, but it will cost $1,600 a month. Can we sign up for Obamacare instead?—L. Winans, Chagrin Falls, Ohio

A: Yes, you can buy health insurance through the Affordable Care Act exchanges even when you have the option to continue on your employer insurance after you leave your job.

But, as you already know, once you're no longer on the company payroll, the tab to stay on an employer plan is pretty steep. You may be able to find a more affordable option shopping on the ACA healthcare exchanges.

Half of Americans get health insurance through their job. Most employees have seen the size of their contribution toward their healthcare premiums go up every year, but employers who offer insurance still shoulder most of the cost.  

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Employers pay an average 82 percent of the cost of an individual worker’s health insurance and 69 percent for family coverage, according to the 2017 Kaiser Family Foundation Employee Benefits survey. Average annual premiums for an individual totaled $6,690, so the typical employee kicked in $1,213. Premiums for a family totaled an average of $18,764, with the worker paying $5,714.

Under COBRA (the Consolidated Omnibus Budget Reconciliation Act, passed in 1985), an employer with 20 or more full-time workers must allow you and your dependents to continue on the company health plan for 18 months, unless you're fired for cause. If you’re disabled, you can stay on for 36 months.

But your employer will no longer subsidize your insurance and on top of that, you will pay a 2 percent administrative fee—in other words, 102 percent of the cost.

You lose another benefit too: When you pay insurance premiums through payroll deductions, your dollars go in pretax (like a 401(k) contribution), reducing your taxable income. If you buy on the individual market, it's with post-tax dollars.

On the ACA, you have to pay the whole tab yourself if your income doesn't qualify you for subsidies. You might also be eligible for financial assistance to cover your out-of-pocket costs. You can qualify if you make less than $48,000 a year if you’re buying individual insurance, or make less than $98,000 if you’re insuring a family of four.

Check the Kaiser Family Foundation's subsidy calculator for an estimate of how much financial help you are eligible for or whether your income is low enough to qualify for Medicaid.


Confused about choosing a health insurance plan for 2018? Send us your questions about signing up for job-based insurance, Medicare or a plan sold on the ACA exchanges.
 

Still, there’s no guarantee an ACA plan is going to be a better deal, especially if you don’t qualify for financial help. On average, premiums for ACA plans are up an average 34 percent from 2017. For 2018, the average monthly premium on the federal ACA exchanges on the benchmark Silver plan for a 50-year-old non-smoker is $750 and for a more comprehensive Gold plan, it's $856 a month, according to an analysis by HealthPocket.com, a health insurance research and plan-comparison website.

You might find a more affordable option buying off-exchange—directly from an insurance broker or insurance provider—so you should check that out too.

But there are reasons you and your family may want to stay with your husband’s employer insurance.

Under COBRA, you keep the same insurance plan. And because it’s open enrollment season—the time of year when you choose health insurance for 2018—your husband now has the option to switch to a lower-cost plan within his company’s offerings for next year.

And if you think he'll land a new job relatively soon that also provides employer insurance, it might be worth staying on the current plan to make certain you can stay with the same doctors and maintain the same level of coverage. "Most people don’t really care about their insurance carrier. They care about the doctors they have,"' says Hector De La Torre, executive director of the Transamerica Center for Health Studies.

You have to sign up for COBRA or buy a plan on your own within 60 days of leaving your company to continue on your employer plan or to get ACA coverage this year. You have until Dec. 15 in most states to choose an ACA plan that will begin in 2018 (nine state exchanges and Washington, DC have extended ACA open enrollment as late at January 31, 2018. 

Don’t let the convenience of simply staying on the same plan deter you from weighing all your options. Most people can save money when they switch plans. Don’t just look at premiums. Also consider the level of coverage you’ll get and the out-of-pocket costs such as deductibles and co-pays you’ll need to cover on your own.