There’s a saying in the health insurance industry that COBRA bites. COBRA is an acronym for Consolidated Omnibus Reconciliation Act (we’ll stick with the acronym, that’s a mouthful). It exists to provide a safety net for employees and their families who lose health coverage due to certain life events, like job loss or a reduction in work hours. Many startup founders have COBRA when they first quit their jobs and transition into entrepreneurship. So… why does it bite?

It’s expensive, cumbersome, temporary, and often unnecessary. It’s expensive because you’re paying the entire health insurance premium. You enjoy the convenience of temporarily maintaining your old health insurance coverage, but you lose the employer support in covering that premium payment. It can make sense in some cases like if you’ve met your deductible and have upcoming work that would justify the high premium payments, but this is rare.

It’s not easy to enroll in and it’s only temporary. It’s a lot of paperwork to get your COBRA enrollment done. It’s easy to mess up activating it, following deadlines, etc. And even once you get it activated, it’s temporary. Eventually, COBRA will expire. It’s meant to be a temporary solution. You should always be shopping around for alternatives.

It’s always worth getting a quote for what it would take to leave COBRA. The first step is to look at the federal marketplace with us and see what plans are available based on your new situation. When we put your income numbers in, keep in mind that you will likely make less money than you did before. This often means you can leave a COBRA plan and get into great coverage with subsidies because of your income changes.

There’s life after COBRA, even if you’ve been bitten already.