Good for Insurance Companies, Bad for You

Over the past decade, job transitions have become increasingly common in the United States. Perhaps the technology boom of the late 1990’s perpetuated the change, or perhaps it is because of the move toward corporate consolidation of most major economic sectors.

Whatever the reason, there’s no denying it; the era of working an entire career for one company is over.

As Americans become more mobile in their professional lives, they need something more than the stagnant, employer-based health coverage system we currently have in this country.

Accordingly, insurance companies really need to get their act together and figure out how their increasingly unpopular product is going to best serve a mobile workforce.

Sure, the insurance industry will tout the benefits of COBRA as a good plan for job transitions. But, all COBRA really does is give a worker the same coverage they had at their previous job, at double or triple the cost.

Good for insurance companies, bad for you.

Imagine this. You just graduated from college. You’re excited because you scored a great job with a good entry-level salary. Unfortunately, the start date for your job is not until three months after graduation.

For the three months between graduation and the start-date, you are forced to pay a few hundreds dollars per month extra for the same coverage you had in college because COBRA is your only option for decent coverage. Once you start your job, you get to wait a couple more months (paying COBRA rates along the way) before you can enroll in the employer-sponsored plan.

The headaches don’t end there.

If it’s true that recent college graduates can expect to have at least ten different jobs before they retire, then you can look forward to experiencing COBRA at least ten times throughout your career.

That’s ten times of paying several hundred dollars (more for family coverage) for a few months during a job transition.

Conservatively, that’s two months for each transition (the time between leaving a job and waiting for the next enrollment period with your new employer) and at least $300 per month for COBRA coverage. So, 20 months at $300 per month. That’s $6,000 over a career, just to bridge the health insurance coverage gap between jobs.

Again, this situation is great for insurance companies. But, it’s horrible for you, the college graduate who can plan on changing jobs ten different times.

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