Pros and Cons of COBRA Health Insurance Coverage

COBRA (Consolidated Omnibus Budget Reconciliation Act) allows you to keep your health insurance coverage for a limited period of time when you lose or leave your job. You have up to 60 days after you leave your job to decide whether to opt into COBRA .

COBRA health insurance coverage could be a lifesaver if you lose your job, but be sure to do your homework and to consider the pros and cons of COBRA coverage before choosing it.

Pros of COBRA Coverage

No Coverage Changes. If you accept COBRA health insurance coverage, you will not have to make any changes in health care providers, since your coverage will be exactly the same as it was when you were an employee.

No Lapse in Coverage. Accepting COBRA health insurance coverage ensures that there is no lapse in your health insurance after you leave your job.

Easy. Your ex-employer generally handles the administrative end of things when you choose COBRA coverage so you should have a limited amount of paperwork.

Coverage for Pre-Existing Conditions. If you have a pre-existing health condition that is covered under your former employer's health insurance plant, it will continue to be covered under COBRA.

Flexible. Even if you don't accept COBRA coverage for yourself, you can choose it for your spouse and/or children if they were covered under your former employer's group plan.

Reduced Premiums for Some. Depending on when you lost or left your job, you may be eligible for reduced COBRA premiums under a Federal law. Check the Department of Labor website at www.dol.gov/dol/topic/health-plans/cobra for details.

Guaranteed Coverage Availability after COBRA. If you maintain COBRA coverage for the maximum 18 months with no lapses, a Federal law, HIPAA (Health Insurance Portability and Accountability Act), allows you a one-time guaranteed opportunity to purchase a comprehensive health insurance plan.

Cons of COBRA Coverage

Expensive. If you choose Cobra, you will have to pay the full premium for your COBRA coverage plus an administrative fee, whereas, as an employee, your coverage probably was partially subsidized by your employer. For some people (especially young people in good health), an individual health insurance policy may be less expensive than COBRA.

Temporary. COBRA coverage usually lasts a maximum of 18 months.

Limited Availability. COBRA only is available to employees of companies that have at least 20 employees and that offer employees a group health insurance plan. Some states require continued coverage for employees of smaller firms, so be sure to check your state's regulations.

Cost and Coverage Risks. If your former employer changes its health insurance provider, eliminates its group health insurance policy, or experiences a sharp rise in health insurance premiums, you will be affected just as if you were still an active employee.

Sources:

Joseph John, www.filife.com, Pros and Cons of Cobra Health Coverage - FiLife.com

Jacques Chambers, www.hcvadvocate.org, What Happens When COBRA Ends?