COBRA alternatives are necessary because the program costs more than most people can afford. This law exists to provide continued health coverage after an employee leaves a job. Coverage is only intended to be temporary. When a person is faced with the choice between purchasing private health insurance and continuing with group health care insurance through COBRA, they must act quickly because they have a 60 day window to enroll in the COBRA plan. COBRA is the acronym that is short for the Consolidated Omnibus Budget Reconciliation Act. This law protects people by allowing the individuals that are eligible to continue their group health care plan for up to 18 months.
Eligible people have a limited time to make their decision about whether to proceed with the plan under COBRA or to instead choose a plan offered through an independent health insurance agent. After 60 days, the person is no longer eligible to use the benefits protected by COBRA.
Here are the advantages of using the COBRA plan:
· Coverage is guaranteed for up to 18 months as long as premiums are paid on time without interruption. There is no guarantee that everyone can find coverage in the private sector. COBRA allows the covered person to continue the policy they had while working for their former employer without interruption. This removes any worry about spending time looking for an alternative to COBRA.
· Group health plans usually have a lot of bells and whistles such as low deductibles, high dollar coverage, and a long list of providers and conditions that are covered. Sometimes it is difficult to find similar choices with private health insurance.
· Pre-existing conditions are often excluded for at least 12 months on private health insurance plans. The length of time the exclusion continues depends entirely on the company. A person covered through their former employer’s group health insurance plan does not have to worry about pre-existing conditions, at least while the coverage continues.
Disadvantages of continuing with the plan through COBRA:
· If a person misses a payment, coverage can be canceled. Once the policy is canceled, it cannot be reinstated. COBRA law requires the insurance company to send notices of nonpayment for cancellation; however, it is easy for a person to miss the notice, leading to an increased likelihood that the policy will be canceled.
· Premiums on a group health care plan are very high in comparison to private plans. The law requires that the covered person pays 100% plus a 2% penalty of all premiums. People often find that their premiums through COBRA are up to three times higher than private health insurance plans.
· COBRA is a temporary fix to a health insurance problem. The very fact that coverage is temporary can be a problem if the covered person finds a job that does not offer healthcare benefits.
Experts recommend that people find an alternative to COBRA as soon as possible to save money and to obtain a policy that is not temporary.