COBRA

The Consolidated Omnibus Budget Act of 1985, better known as COBRA, allows individuals to continue health care coverage for up to 18 months after leaving employment. COBRA also covers spouses and dependents. Children who are no longer covered by their parents’ insurance due to their age can also elect COBRA coverage through their parents’ employer.

Once health care coverage is lost, there is a 60 day grace period in which you can shop around for another option or choose to elect COBRA. If you do not elect COBRA within 60 days, the COBRA option is no longer available.

What Does COBRA Cover?

COBRA allows you to continue with your employer’s insurance plan, meaning no change in coverage. However, the drawback is that you must pay the entire monthly premium rather than the discounted premium you pay through an employer. This can often be several hundred dollars per month depending on the extent of your coverage. You may have the option of choosing a lesser version of the same coverage (for example, eliminating your dependants) in order to lower your monthly premium. However, you will not be able to increase your current level of coverage.

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Who is COBRA good for?

COBRA is ideal for those with recurring or pre-existing health problems that can make obtaining insurance from a private insurer costly or difficult. It may also be a good option for those simply waiting for health insurance from a new employer to become available (most employers have a 30 to 90 day probationary period before you are eligible for their insurance coverage). Pregnant women (or women who feel that they are likely to become pregnant) seeking prenatal care would also be good candidates to elect COBRA coverage. COBRA also continues to cover prescription drugs, surgical procedures, and hospital care.

Is COBRA right for you?

However, if you are young and/or generally healthy, do not foresee any medical procedures or becoming pregnant in the near future, and do not take prescription drugs, COBRA may not be worth the high monthly costs. It may be to your benefit to shop around and find a less expensive private plan or elect less coverage for a period of time. However, remember that is never a good idea to let insurance coverage lapse completely, as it can make obtaining coverage from a private insurer very difficult or costly in the future.

Is COBRA right for you? Get a health insurance quote today!

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