COBRA
Short for the Consolidated Omnibus Budget Reconciliation Act, COBRA is a federal law that allows individuals and families to continue their group health insurance after losing a job.
This is a good option if you need short-term coverage or prefer to stay in your current network of trusted doctors, but the price tag is high. Estimated COBRA plan costs, which vary depending on where you live and your employer plan, can be up to 102 percent of your total healthcare premium, including the amount previously paid by the employer.
This price tag can top $2,250 a month for family coverage.
Why is it more than when you had a job? When you get health insurance through your employer, they pay the bulk of the premium, says Christen Linke Young, secretary of the Delaware Department of Health and Social Services in New Castle.
“What you pay as an employee is maybe 25 percent of the total cost,” she says. “But you have to pay 100 percent of the premium when you use COBRA. For most people, that won’t be the most affordable option.”
COBRA is available for nearly all group health plans for employees who worked somewhere that had 20 or more employees (it does not cover plans offered by churches or the federal government, but the federal government has something equivalent called Temporary Continuation of Coverage).
If you choose this option, you have at least 60 days from the date you lose coverage or the date you receive your COBRA election notice, whichever is later, to sign up to continue with your former employer’s plan. That coverage lasts for up 18 months after a job loss, or longer in certain cases such as divorce or disability.
“If someone is in the middle of a very expensive healthcare service, leaving job-based health insurance while in treatment for cancer or another health problem that’s very costly, they may value continuity with their health insurance,” says Young.
