Health Insurance for individuals and Families

How does Cobra Insurance Work?

As of 2014, it is unlikely that you’ll need COBRA, when the new ObamaCare plans kick in. Why does that help, you may ask. Well, it’s because all the new plans guarantee issuance regardless of preexisting conditions, so if you lose your job you don’t have to worry that you lose your health coverage. Many people know that there is a specific open enrollment period, but there is also a special ACA enrollment period for those who lose their jobs. This means you don’t have to scramble to find a job you don’t want, and in fact the ACA law will create more than a million entrepreneurs. Also, if you switch jobs, your new employer has to offer you insurance within 90 days -no more long waiting periods.

Currently, as you probably know, most insurance companies in the United States will decline coverage to new individual or family applicants with certain pre-existing conditions. While this helps keep the cost of health insurance premiums down, it is less than ideal for someone who has a declinable condition. COBRA (an acronym for the Consolidated Omnibus Budget Reconciliation Act) was designed so that individuals with pre-existing medical conditions can still get coverage when they leave their jobs or their parents’ plan. To qualify for COBRA you must have recently been insured through your parents’ or your last employers insurance plan. The video below gives a good overview although it fails to mention there are some COBRA options for companies with less than 20 employees. So this isn’t a bad option for the next few months.

Warning: COBRA can end up being very expensive and is usually only a temporary solution (18 months). We only recommend it for our clients who cannot get coverage under an individual or family plan. You usually have 60 days from the termination of your previous coverage to “elect” COBRA. We recommend that you apply for an individual insurance plan during this 60 day election period. If you are approved for a less expensive individual plan, then you probably will not want COBRA. If you are declined, then you have the option to select COBRA and be retroactively coverage back to your last day of coverage.

Who Should Elect COBRA?

Any COBRA-eligible individual who has applied and been turned down for individual coverage because of a pre-existing condition. Also anyone qualifying for the federal stimulus subsidy act of 2009 whose subsidized COBRA premium is less than a comparable individual plan.

Who Should Skip COBRA?

Everyone else. COBRA is expensive and temporary. If you can get individual coverage you are usually better off!.