Can I use ObamaCare for health insurance or must I use COBRA?

Question: I was laid off recently. I've decided that, rather than look for another full-time job, I'm going to work part time while I finish my degree. That means money will be tight -- and I just found out that continuing my health benefits through COBRA will cost more than $600 a month! I've heard that the insurance available through the health insurance exchange is much cheaper. Do I have to use COBRA, or can I get my insurance on the exchange?

Answer: You can choose whichever insurance plan works best for you and your budget.

COBRA (an acronym for the Consolidated Omnibus Budget and Reconciliation Act) gives employees and their dependents the right to continue job-based group health benefits after an event that would otherwise terminate those benefits. Often, COBRA kicks in after an employee is laid off or terminated, like you. But COBRA applies whenever coverage would otherwise be lost. For example, if your hours were cut below your employer's threshold to qualify for benefits, you could use COBRA even though you are still employed. Or, if you and your spouse got a divorce, your ex could continue coverage through COBRA.

But COBRA coverage often does not come cheap. You are responsible for paying the whole premium, not just whatever portion (if any) your employer formerly required you to pay. Your employer can even add a 2% fee, for the cost of processing paperwork and administration. This means you might quickly go from having a portion of your premium deducted from your paycheck to having to write your own check for two or three times that much each month.

You have the option to get insurance through Obamacare instead. You should be able to find policies that are cheaper on the health insurance exchange. But read the fine print: These policies might also have higher deductibles, copays, and charges than you are used to.

When you are comparing prices, make sure you factor in any subsidies you might qualify for. Especially if your income will be relatively low, you are likely to be eligible for government help in paying for your insurance. You can take this assistance either as a credit on your tax return or as a discount on your premium payments.

If you want to use Obamacare, you have 60 days to do so after you lose your insurance. Don't miss this deadline however: Once this special enrollment period ends, you will have to wait for the regular open enrollment period -- typically around New Year's -- to purchase a policy. (You also have 60 days to opt for COBRA coverage; your employer or its plan administrator will send you the paperwork.)

No matter what you decide, remember that we are all now required to either have health insurance or pay a fine. You can find out more about COBRA and Obamacare in Options If You Have Job-Based Insurance, at the federal government's Obamacare website, HealthCare.gov.

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