Starting new company — is COBRA cheaper?

I hate my boss and I have finally worked up my courage to leave and start a competing company.  I want to have nothing to do with my old company when I leave.  So I’d rather not keep my COBRA coverage with them.  Will I be able to find a plan that I can afford?  There’s one more hitch: my partner (we’d be married if it were legal) is covered too on my employer’s plan.  I’m 35 and my partner is 37.

Moving On to My Own Thing

Dear Moving On to My Own Thing,

Congratulations on starting your own company.  You are about to enter a very exciting and busy time.  Let’s get your health insurance taken care of, so you can focus on your business.

Since you and your partner are relatively young, you might be able to find an individual plan that costs the same or perhaps less than your old plan.  “Individual” means that you are buying it on your own, not with an employer group.  The individual plan won’t be as generous on benefits; it is likely to have a higher deductible, higher co-pays, etc.  (See previous post: Finding a Plan Cheaper Than Employer’s Plan.)

Buying health insurance on your own for you and your partner will mean buying two individual plans.  Your employer’s plan may have covered your partner as a “domestic partner” and paid a rate similar to what covering a spouse would cost.  This is one reason that COBRA might be cheaper than buying a plan (in your case, two plans) on your own.

As for cutting off all ties to your employer, don’t worry – your old boss won’t be handling your health insurance.  The health insurer or the plan’s administrator will send you the bills and take your payments.

It’s worth exploring your options with a competent health insurance broker.  In the end, choose the cheapest one with the least hassle – you need all of your money and energy for your start-up.

Linda Riddell

About Linda Riddell

A published author and health policy analyst with 25 years’ experience, Linda Riddell's goal is to alleviate the widespread ailment of not knowing what your health plan can do for you.