Should I keep COBRA or try another health insurance provider if I'm moving to a new state and staying freelance?

December 1, 2007 4:28 PM

I recently left my job at Yahoo! in Northern California and am relocating to Portland, Oregon to try my hand at self-employment. Extending my existing medical coverage with COBRA will cost me, my wife, and our three-year-old son $1200/month, which seems absolutely insane. Please help me understand the risks or consequences of waiving COBRA and getting new a new insurance plan.

Continuing my Aetna PPO option through COBRA will cost me more than double every other quote listed on eHealthInsurance in Oregon for our family, even for those plans that appear to be comparable. (My existing plan has a $750 annual deductible, $2,750 maximum out-of-pocket, and $15 co-pay for office visits and preventive care with no deductible.)

What's so great about COBRA that it costs more than double everything else? Am I going to screwed with some sort of pre-existing condition nonsense by not continuing coverage from my previous employer? What are the risks by giving up COBRA? Plus, will I even be able to use COBRA if I'm moving from California to Oregon? (Aetna doesn't appear to offer individual coverage in Oregon, so is every doctor out-of-network?)

And finally, is there anything I should look out for when buying through eHealthInsurance? If anyone has specific recommendations for Oregon providers, that would be wonderful.

posted by waxpancake to health (23 comments total)

Pick up the latest edition of Consumer Reports to read about people trying to go it alone on medical insurance.
posted by potsmokinghippieoverlord at 4:34 PM on December 1, 2007

Well, is there any reason any of those other companies might not be willing to insure your family? Do any of you have chronic health problems or conditions that are being treated?

The risk of giving up COBRA is that if you can't find other coverage, you could end up with gaps in coverage that could allow a new insurance company to impose waiting periods before covering pre-existing conditions.

Our family has used COBRA several times, and you have some period during which you can sign up for it--I think the last time we signed up for it (retroactive to his separation date) almost 90 days after my partner's employment ended. So you can look into whether you have time to look for other coverage before enrolling in your COBRA coverage.

You should talk to your current insurance company about what would happen with providers in Oregon. I once had coverage through a company that had no providers in my area; since going to an in-network provider wasn't a viable option, they covered out-of-network providers at in-network rates BUT I had to pay for everything up front and then seek reimbursement from the insurance company. I learned to keep very good records!
posted by not that girl at 4:40 PM on December 1, 2007

We have no pre-existing conditions that we know of or any conditions currently being treated. We're both in our early 30s and in perfect health.
posted by waxpancake at 4:42 PM on December 1, 2007

In most states individual plans will have preexisting conditions and pregnancy restrictions--also--the exact rate will most likely be determined through a qualification process. Do not drop your COBRA until you have certain coverage and understand the conditions, costs and restrictions of a new individual plan. I would guess the best option for you is to find a group plan offered by a professional association etc. for which you might be eligible. You really need to call the Aetna customer service number to explore specific coverage available in Oregon. Good luck on your new adventures.
posted by rmhsinc at 4:43 PM on December 1, 2007

I think under HIPPA the usual waiting period for pre-existing conditions is waived if you have had continuous coverage. (I'm not completely sure - you would need to read the fine print.) Absolutely do not go one day without some kind of health insurance - that will be the day your child breaks his arm or your wife finds out she is pregnant.
posted by metahawk at 5:04 PM on December 1, 2007

$1200/month, which seems absolutely insane
I paid about $900/month for COBRA last year, and didn't even consider going without. My situation was somewhat different than yours, in that I expected to join another group plan when re-employed. A significant advantage of COBRA is that it keeps you continuously in group coverage, which under HIPAA (as metahawk wrote) counts toward satisfying any pre-existing conditions waiting periods that may be otherwise imposed by a group health plan you may later join.

What's so great about COBRA that it costs more than double everything else?
The cost of COBRA is a function of the cost paid by your group plan, which may have been influenced by group participants who used the plan much more than your family did. Research further on individual coverage and you'll learn that the rates will be raised significantly (or the policy not renewed) if you use the insurance much. And the benefits of the individual plan may be limited or capped in ways that are not apparent.

Aetna doesn't appear to offer individual coverage in Oregon, so is every doctor out-of-network?
If you stay in your previous job's plan via COBRA, you would still have group PPO coverage. Aetna has an extensive provider network in Oregon:

You might also look into the Oregon Health Plan, which at least your son may be eligible for, depending on family income.
posted by Snerd at 5:20 PM on December 1, 2007

COBRA is a great option if you're otherwise uninsurable (as decided by insurance companies) or if your health care costs for comparable health insurance would be even more expensive than COBRA. For example, someone with a chronic illness that is costly -- say, a transplant recipient who requires expensive immunosuppressants, monthly blood draws, and will probably need another transplant at some point in the future (transplants are not cures, they are treatments) -- would be denied by most health care providers. If the provider is obligated by law to cover someone who has a chronic illness the costs for that person to obtain individual coverage are likely to be prohibitively high, much higher than the monthly COBRA rate.
Investigate all your health insurance options before deciding against COBRA, however. It may actually be your best option, depending on what, exactly, the other plans provide in terms of coverage. It's not just the deductible and co-pay; there's a lot of fine print to check and double check before deciding against COBRA.
posted by k8lin at 5:26 PM on December 1, 2007

What's so great about COBRA

There is nothing so great about "COBRA." COBRA is not a health plan, it is a law that allows you to continue to be in the group health plan offered by your erstwhile employer, if that's what you want. (The acronym stands for "Consolidated Omnibus Budget Reconciliation Act of 1986." This law involves a ton of stuff, not just health insurance.)

Under COBRA, naturally, you have to pay your premium rather than receiving coverage as a benefit from your employer. If they are quoting you $1200 a month, what this means is that Yahoo! was paying $1200 a month, more or less, for your health insurance. The reason it is so expensive is probably that it is damn good coverage.

You can certainly get health insurance that's cheaper -- when I was unemployed last year I ended up with an individual plan from Blue Cross that cost about $125 a month -- but it likely will have higher co-pays and deductibles, more exclusions, and/or a smaller network than your former Aetna plan.

If you want, you can stretch things out for a couple three months. Your former employer has 15 days to notify you that you are eligible for continuation of health insurance, which it sounds like they have already done. Then you have 60 days to sign up, and another 45 days to pay your first premium. You can actually wait 60 days, sign up, then wait another 45 days to pay, and you will be covered retroactively to the day you lost your employer-provided coverage. If you didn't need any health insurance during that time, of course, you just don't make your payment. Voilà, you had just had coverage (well, the option to buy coverage if you need it) for over three months without paying a dime! The downside, obviously, is that if you do need coverage, you may find yourself needing to pay three-plus months of premiums all at once. If you are all healthy, though, it may be worth the risk. At the very least, it gives you three months to shop around.

You need to have no more than a 63 day break in coverage to avoid a waiting period for pre-existing conditions, but since none of you have any pre-existing conditions, you don't have to worry about that.
posted by kindall at 5:48 PM on December 1, 2007 [1 favorite]

I know you said you have no preexisting conditions, but it is my understanding that the waiver of waiting periods and/or denial of coverage for preexisting conditions under HIPPA applies only to subsequent coverage under group insurance. As it was explained to me, individual insurance policies are not subject to that type of protection. (Let me know if I'm wrong...I hope I am. The health insurance situation in this country is so fucked.)
posted by diggerroo at 5:53 PM on December 1, 2007

What you consider a preexisting condition and what an insurance company will consider a preexisting condition are very different things. People have been denied health coverage or had their coverage revoked for things like having once had a yeast infection, ear infection, or UTI or any of the small things that people who are perfectly healthy will get from time to time.
posted by hindmost at 5:59 PM on December 1, 2007

In Oregon, both Providence Health Systems and Kaiser Permanente offer individual HMO family health plans that are more than affordable -- in my case (mid twenties, single, etc.) it was under $150/mo for pretty complete coverage. My mid-twenties best friend who is married (he has lots of health issues though) is paying under $300/mo for himself and his wife. This isn't just catastrophic insurance, either -- this is a full heath plan with better deductibles than I had at my full time job.

CORBA definitely isn't worth it, IMHO.

There are several creative guilds in Portland that offer group plan insurance if you're a member; if you're freelancing in IT you'll qualify to join at least one of them. I can't remember names or contact info right now though.
posted by SpecialK at 6:45 PM on December 1, 2007

According to what I've read on askme, you have 90 days after quiting to activate COBRA. The great thing about this is that it's retroactive, so if you get injured, you can re-activate your old insurance within 90 days. So it's not a decision you need to make right away. You can investigate other plans and see what you think.

If I was in your position, I would definitely keep what you had. Yahoo probably has a pretty good plan and if you buy health insurance as an individuals there is a risk that the company will try to screw you if they can. I wouldn't risk it if I were in your position. The U.S. healthcare system is pretty fucked up.
posted by delmoi at 7:08 PM on December 1, 2007

Not only is your COBRA not "expensive," it is virtually certain to be cheaper in real economic terms than any quote you'd get for comparable coverage coverage is always cheaper when bought on a group employer basis than on an individual insured basis. Not only is there bulk purchasing power, and professional negotiation and administration by Yahoo! HR, there's also the fact that Yahoo!'s workforce is overwhelmingly young, well-educated, and well-paid, and thus without the many expensive maladies and accident-proneness that tends to characterize employees and dependents who are older, less-well-educated, or less-well-paid.

Why are you getting lower quotes, then? Because the coverage you're being quoted is much, much, much worse than the Yahoo! plan. Some of the ways that it is worse aren't going to be obvious to you, but they're there, and you'll find out at the worst possible moment what they are. If you get lucky and never find out, that's just because you were lucky, not because you got a bargain.
posted by MattD at 7:30 PM on December 1, 2007

I would look into a Healthcare savings account (HSA). The premiums are a lot lower and if you have some catastrophic problem the insurance will kick in. This is after you exceed the max out of pocket expense, say about $5700. You pay if you need to go to the doc or if you need scripts. Our premium is about $375 a month for a family of four. The company we are with is called GoldenRule. Not sure if they are in Oregon or not but there are plenty of HSAs to look at.

Hope this helps!
posted by bkeene12 at 7:52 PM on December 1, 2007

Do not allow your self to go without health insurance. If you have any pre-existing conditions, you will have to sign riders to get coverage at all. Pay the cobra if you must, but do not allow for a gap in coverage.
posted by Sara Anne at 8:17 PM on December 1, 2007

Have you looked into joining the freelancers' union and getting coverage through them?
posted by foxy_hedgehog at 8:56 PM on December 1, 2007

I really liked the health insurance broker I went spoke with here in Portland. The company is called Thorton and Associates. They interviewed me to get an idea of what we needed and presented plan options from a few different companies.

We ended up not getting coverage through them because of a pre-existing condition for my wife, but the broker was good and the plans were quite reasonable in price.

If you want contact information for them, email me. The turn around time for underwriters to approve your application seems be to a couple weeks to a month, fyi.
posted by afflatus at 9:08 PM on December 1, 2007

I'm in Oregon and I have an individual plan through HealthNet and I love it. It's actually better than the insurance I was on through my mom's company and much much cheaper than the COBRA quote I was given when I was dropped from my mom's plan. The turn around time from application to coverage was quick (about two weeks) and they approved me, even though I have a minor health problem.
posted by miss meg at 9:24 PM on December 1, 2007

I would talk to a benefits person at Yahoo if you can. First to make sure that your Aetna insurance does carry over to Oregon and also to see if there are other plans offered to Yahoo employees that might be more affordable. Do you know if Yahoo offers more than one plan?

I recently left the Univ. of Calif. system and moved to Portland. I had HealthNet in California, but it wasn't portable if I moved (even though like miss meg mentions--HealthNet operates in OR. Don't know why I couldn't keep it). I had a choice b/w a couple of the other plans that UC offers (two BlueCross plans) and I chose a really inexpensive "emergency" type coverage. That way I will have the continuous coverage until I can get another job up here...

(btw, I moved from SoCal and I absolutely love Portland)
posted by shakobe at 10:13 PM on December 1, 2007

Wow, your situation is disturbingly similar to mine (including the move from a web company in California to freelancing in Portland).

Is your wife going to be getting a job in Portland anytime soon? If so, it might make sense to go with COBRA for a few months. And you might as well cram as many doctor/dentist/pediatrician/etc checkups in there as you can.
posted by subclub at 10:37 PM on December 1, 2007

You guys are awesome, thank you.
posted by waxpancake at 11:54 PM on December 1, 2007

As others have pointed-out, the cost of your COBRA coverage is so high because it is damned good. $750 annual deductible? $2,750 maximum out-of-pocket? Good lord, that's awesome coverage! I don't think you could even get that low of a deductible in a private plan, no matter how much you paid. Individual deductibles in the range of $3000-$4000 (or higher) are not uncommon with private insurance, especially if you have any pre-existing conditions. And, it's not unusual for private policies to decline coverage completely for all sorts of common conditions. Allergies, for instance, are big red flags for insurers. As is depression.

Confirming, also, that portability of pre-existing conditions under HIPAA pertains only when moving from one group plan to another group plan. If you move to a private plan, any and all medical conditions you and your family may have experienced throughout your life are fair-game to the underwriters.

COBRA is handy in that it keeps you in a group plan and, thus, keeps you eligible for portability under HIPAA. But, you can only stay on COBRA for a limited time. Since you are wanting to try self-employment, I would heartily suggest your wife find some sort of employment that includes family insurance.
posted by Thorzdad at 8:25 AM on December 2, 2007

Also, keep in mind that the costs you see displayed on sites like eHealthInsurance are "come-on" or "teaser" rates. Few, if any, people actually get those rates. Your true cost will be determined after underwriting...a process which can take several months, if they decide they want to delve into you medical history. This will often require you to contact your doctors and get your records yourself.

We are into our third month of underwriting with Anthem. Their latest request is that my wife contact a local hospital for her records. Anthem has also said they will not cover the cost of retrieving said records (even though they are requiring the records for underwriting to continue)...which can often cost over $100.

Another little "gotcha" we encountered when applying for a policy through Golden Rule/UnitedHealthcare...they would only give us their "best" rates if we agreed to do electronic billing from our bank account. That isn't so bad until they explained that they would be withdrawing the "estimated" cost of our policy each month as we underwent underwriting. In effect, that meant we would be paying two insurance bills (our current policy and the Golden Rule estimate) each month for as long as underwriting continued. Luckily, they did reimburse us for those payments when we declined their laughably useless policy.

Of course, YMMV. With any luck, Oregon is a much more consumer-friendly state, when it comes to insurance. Unlike Indiana, where the state insurance commissioner is a dedicated and loyal water-carrier for the industry.
posted by Thorzdad at 8:37 AM on December 2, 2007