Alternatives To COBRA

There are less expensive health insurance options for the self-employed.

I was just purchasing a cup of coffee downstairs when I heard someone complaining about the high cost of insurance under COBRA, which is a federal law that allows people to keep their health insurance after they are laid off by paying what their employer had been paying.

But there are better less expensive options.

Membership organizations sometimes offer insurance, but there might be a “middle man” involved charging Third-Party Administration (TPA) fees. Also, you have to factor in the cost of membership in the organization.

Many small businesses (including sole proprietors) will be able to find health insurance for less than what they are paying under COBRA by joining their local chamber of commerce. In some cases, TPA fees can be avoided if a business manages its own health plan. If fact, health insurance is the number one reason small businesses join chambers of commerce. Some dental insurance providers require companies to have two employees before they are eligible for dental insurance, but many health insurance plans include some level of basic dental coverage.

Sole proprietors may need to provide a business certificate (i.e. a doing-business-as or DBA certificate) to the insurance companies. You should be able to get one from your local city/town hall (that’s good for a couple of years) for under $50.

So if you are paying too much for COBRA, check out your local chamber of commerce and do the math. You could save a lot of money.

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