COBRA Insurance Coverage

Cobra, or the Consolidated Omnibus Budget Reconciliation Act, was passed to help assure that all individuals and their families have access to group medical insurance.  COBRA offers health insurance policies to certain individuals who have lost their health coverage due to certain specified conditions. While COBRA can be very useful for those individuals who qualify, the policies can also be extremely expensive. Before deciding whether to activate COBRA coverage, you should compare your COBRA rate with an individual health insurance policy rate or a short term health insurance plan and then decide which best suits your needs both medically and financially.

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COBRA Coverage

For eligible individuals, the COBRA plan offers coverage to beneficiaries for up to 18 months (36 months for certain exceptions) and includes the same benefits as the original group health care policy. The following are some of the benefits offered by COBRA plans:

• Inpatient and outpatient hospital care
• Physician care
• Surgery
• Prescription drugs
• Other medical benefits, such as dental and vision care

Individual and family health plans also offer the similar benefits as COBRA plans, sometimes at a more reasonable price. Make sure you compare your options before committing to one course of action.  

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Being Eligible for COBRA

You may only be eligible for a COBRA plan if you are currently or were recently (within 60 days of leaving the workplace) employed by a company that had more than 20 employees and offered group health insurance at the time of the qualifying event. Qualifying events are instances where group health care plans are terminated, qualifying individuals for COBRA plans. These events include:

• Termination of employment (death, retirement, dismissal, resignation)
• Reduction of working hours
• Divorce (spouse)
• Loss of "dependent" status (child)

If you are unsure about whether you will be eligible for COBRA and want to make sure you and your family are covered, you should also explore individual health plan options.

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Drawbacks to COBRA

While COBRA is great for some individuals, there are certain drawbacks to the medical plans, such as the cost. While employed, workers are generally only responsible for a portion of their insurance premium.  However, COBRA plan policy holders must pay the entire amount. Although COBRA plans offer a very wide range of coverage with few restrictions, they can be much more expensive than other options (for example, HIPAA or individual short term insurance) and may offer more coverage than necessary.  If your health needs match with those that COBRA offers, and you are willing to pay a high price, COBRA may be right for you. Regardless, it is a good idea to learn about the many health insurance options available, as well as potential providers, to find the most suitable and affordable policy.

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