Is COBRA a Good Choice for You?
Health insurance coverage is not simply a desirable policy to possess but it is pretty much a necessity these days. Due to the high costs of healthcare, one who does not have health insurance and is seriously injured or falls ill will face an uphill battle when it comes to paying for their necessary medical treatment. Although many people choose to obtain health insurance, there often comes a time when the policy lapses for one reason or another and prior insureds are left out in the open, vulnerable to possible illnesses or injuries without payment protection. This is where the Consolidated Omnibus Budget Reconciliation Act, or COBRA, comes into play. The following article will highlight the reasoning behind COBRA, detail the pros and cons of this program and discuss any possible alternatives to this insurance coverage program.
What Is COBRA?
COBRA is a health insurance coverage program which provides a way for workers and their families to be covered by a temporary health insurance policy while they are in between a previous health insurance policy and a new one. Under COBRA, these individuals can elect to continue their group health benefits under their group health plan for a certain period of time if they fall within specific categories. Some categories of individuals who are able to take advantage of COBRA include those who have lost their jobs, whether voluntary or involuntary, have incurred a reduction of work hours, are between jobs, going through a divorce or recently widowed, to name just a few. The purpose of this program is to cover individuals who have previously been members of group health plans and for some reason find themselves without the proper health insurance coverage.
This federally based program typically affects employers who have 20 or more employees and offer group health plans to such employees. COBRA requires that this category of employers offer continuation coverage which will allow the employees and their family members to be temporarily covered once they leave the current employer and move to a new company. The amount which the individual is required to pay will vary and can range anywhere from the entire premium payment up to 102% of the cost to the plan.
Pros and Cons of COBRA
This type of interim health insurance coverage has its share of pros and cons just like any other type of health insurance policy program. The pros of COBRA include being able to keep your current health insurance plan which protects you in the case of an illness or accident, not being affected by preexisting condition clauses with new insurance policies and decreasing the large volumes of paperwork which would be needed in order to acquire an individual health insurance policy on your own. In the alternative, the cons of COBRA include having to pay a lot more for health insurance coverage than what you had previously paid, experiencing time constrictions with regard to coverage and having to meet each and every necessary requirement instituted by this coverage plan in order to qualify.
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Alternatives to COBRA
If you are eligible for COBRA and you choose not to maintain your health insurance coverage this way, there are a couple of alternatives to consider. First, if you wish to refuse COBRA coverage you may find that acquiring an individual health insurance policy is an option to consider. Just keep in mind that insurance companies issuing such policies will require you to submit to physical exams and fill out large quantities of paperwork prior to obtaining a new policy. One may also find that their preexisting medical conditions prevent them from acquiring a health insurance policy of this type.
Another avenue to pursue if you wish to decline COBRA coverage is to have yourself added to a family member's insurance policy. One may find that by doing so, the overall premium is lower and they will have to jump through fewer hoops in acquiring a health insurance policy. In addition, by being included on the health insurance policy of a family member, you will not have to worry about expiration periods with regard to coverage as those under COBRA have to be concerned with such a thing.
Who Will Best Benefit From COBRA?
The individuals who may find that COBRA is a good health insurance coverage program to take advantage of may fall into a few categories. These categories include those who plan to join a new group health plan with a future employer, may have enough money to pay for higher premiums for a short period of time, may have preexisting medical conditions and do not have a family member with whom they can join an insurance policy with until theirs takes effect. If you find that you fall within the aforementioned categories, then perhaps taking advantage of all that COBRA has to offer you is a wise decision.