Knowing your options for COBRA coverage and how it works
In 1986 the government realized that many families were going without health insurance after job loss and retirement. Recognizing this the government passed a law known as the Consolidated Omnibus Budget Reconciliation Act, or COBRA insurance for short, that gave employees the option to continue to use their health insurance for a specified time period. With the passing of this law, the government established specific rules and conditions for someone to qualify for COBRA insurance, as well as regulated the cost of COBRA insurance and the length of time it could last.
Since COBRA insurance is a law that allows someone to continue to keep their previously employer’s health insurance plan, not an actual health insurance plan, coverage under COBRA remains exactly the same. You will have the same doctors, same emergency room policies, same prescription plan, same co-payments, and same deductibles. Nothing changes about the actual way that your heath plan works. What does change is how much it costs. Under the COBRA law you will have to pay the entire COBRA premium including anything your employer paid in the past, plus a 2% administration fee.
To qualify for COBRA insurance there are three conditions you must meet:
Many people find that once they understand COBRA, they also understand that is completely out of their price range. This isn’t surprising given most people who need COBRA just lost their jobs. Luckily there are alternatives to COBRA health insurance you can look at that are much cheaper. Most people save over 65% by going with a private plan instead of COBRA. Private plans can offer a strong alternative. If private plans are also too expensive you could also consider government plans or look for another job with health insurance.