COBRA Insurance Pros and Cons

Understand the benefits and disadvantages of COBRA health insurance coverage

Nurse working with child

COBRA insurance coverage is a program that was passed by the federal government in 1986 as part of the Consolidated Omnibus Budget Reconciliation Act. The law provides that people who have recently lost their jobs due to termination, lay-offs, quitting, retirement, or had their hours reduced, can choose to continue their group health insurance coverage for 12-18 months in most cases as long as they pay the entire premium and sign up within the election window. This means that with COBRA insurance coverage, you can choose to keep the exact same health insurance plan. This allows individuals and families to not immediately have to worry about paying very expensive medical costs out of pocket, experience a lapse of coverage, or having to search immediately for another insurance plan. With that said, there are many advantages and disadvantages of COBRA insurance that are important to consider when thinking about whether or not COBRA insurance is the right plan for you.

Pros of COBRA Insurance Coverage
  • You are able to keep the exact same health insurance plan so you don't have to change doctors, pharmacies, hospitals, etc.
  • No need to shop around for new health insurance which can be difficult if you have serious medical needs
  • The process for filing claims, using your insurance, or other health insurance rules and regulations do not change
  • If you have a preexisting health condition you do not have to worry about being denied coverage
Cons of COBRA Insurance Coverage
  • COBRA insurance can be extremely expensive since you are responsible for paying the entire premium
  • There is a time limit for how long you can keep COBRA insurance, usually 12-18 months
  • In addition to paying the full premium, you also have to pay an additional 2% administrative fee
  • If you move out of state or out of the coverage area, your COBRA insurance will likely be cancelled
  • If your company goes out of business or cancels their plan, you will lose your health insurance coverage
  • If your former employer changes their plan, those changes will also affect your COBRA insurance coverage
Weighing the Pros and Cons of COBRA Insurance

Whenever you are weighing the advantages and disadvantages of COBRA health insurance, it is always important to fully understand all of the options in front of you. It is recommended that you always get health insurance quotes, or estimates, for multiple plans and compare those to your COBRA insurance option. This will help you find the best plan, at the best price.