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Should I Take COBRA?


Many Americans get health care coverage from their employers. A recent Kaiser Family Foundation survey showed that around 156 million Americans—or around 49% of America’s population—have some type of health insurance sponsored by their employers.

Yet what happens if an employee wants to leave his or her job to start a business? What happens to your health care coverage when you are entitled to Medicare? And what happens to your family if you suddenly pass away?

Ultimately, you and your family members may be entitled to COBRA Continuation Coverage. Standing for the Consolidated Omnibus Budget Reconciliation Act, COBRA helps workers and families account for their medical needs if they lose group health coverage from serious life events. Even if you are happy with your job and don’t foresee losing your health care coverage anytime soon, it’s helpful to explore what COBRA is and how it can help you extend your medical coverage.

What is COBRA?

COBRA coverage came into existence in 1985. At its core, COBRA provides temporary health care coverage to individuals and their families. That temporary health care coverage is for those individuals and families who would otherwise lose their group health coverage. Essentially, the objective is to give you the option of continuing your health care coverage for a set period to avoid lapses in coverage.

Medical care provided by COBRA includes things like physical care, inpatient and outpatient care, and surgeries. To be eligible for COBRA coverage, your group health plan must be covered by COBRA. Along with that, a so-called “Qualifying Event” must affect “covered employees.” There are many different Qualifying Events, but some of them include the following:

● Termination of the covered employee’s employment for any reason besides gross misconduct.

● A reduction in the number of hours worked by the covered employee.

● The covered employee is entitled to Medicare.

● Legal separation or divorce of the spouse from the covered employee.

● Death of the covered employee.

You can find further descriptions of these qualifying events by clicking here. COBRA coverage lasts for a limited period of 18 to 36 months from the date of your Qualifying Event.

Should I Opt For COBRA Coverage?

If you’re entitled to COBRA coverage, you are legally required to be given a 60-day election period. The question, however, is whether you should.

There are pros and cons to COBRA coverage. As for the pros, you can stay on your group health care plan with no interruption. If you regularly see a specialist in your group plan or have already exceeded your out-of-pocket deductible for the year, COBRA can be a compelling option. Ultimately, it can be a smoother transition after the Qualifying Event occurs.

In terms of the cons, however, many people are surprised by the high costs of COBRA coverage. This is because you are not receiving a premium subsidy from your employer. By opting for COBRA coverage, you may be taking on 100 to 102 percent of the total cost of coverage.

Ultimately, it helps to weigh the pros and cons before making your decision. While costs may be at the top of mind, you may also want to consider things like the time it takes to search for a new plan and whether you need to stay with a doctor that is currently within your group health plan.

If COBRA isn’t a feasible option for you and your family, you can also opt for alternative health care options. For instance, you may be able to find cheaper health care plans on the Health Care Marketplace: we can help. You may also be interested in learning more about short-term health care plans. While they have their limitations, they can be compelling options if you don’t need extensive health care coverage.

Make the Best Decision For Your Family

COBRA coverage was enacted to help workers and their families avoid the shock of quickly losing their health insurance. While there is certainly value in opting for COBRA coverage, there are downsides to pursuing COBRA coverage.

The bottom line? Evaluate your current financial situation, your medical preferences, and the costs of either staying with COBRA coverage or pursuing an alternative. Being deliberate about your choice will ensure that you make the best possible decision for you and your family.

© 2020 PA Health Advocates, LLC

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