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When to Consider a COBRA Alternative

Whether you have been laid-off from work or have quit your job and are looking for another one, it is time to take a look at COBRA and COBRA alternatives. An acronym for the Consolidated Omnibus Budget Reconciliation Act that became a law in 1986, COBRA allows you to maintain group health insurance benefits, even after you have experienced a job-loss or employment-hour reduction. Because COBRA health care continuation coverage can be costly, people often want to consider their options, including COBRA alternatives, before making a decision about coverage during this time of transition.

The number of employees losing their jobs and, thus, their employer group health plans has been on the rise during these times of economic struggle in the United States. Workers in these job loss or job transition situations typically have health care options, which allow them to make a choice regarding affordable health coverage, even if they are unemployed. Costs and coverage vary between these options, which include the following:

COBRA Continuation Health Coverage — If your employer or company has more than twenty employees and provides employer group health plans, they are required by law to offer continuation coverage to workers and dependents who are no longer eligible for the group coverage. However, if the insurance company terminates coverage or if the employee terminates coverage prior to signing up for continuation coverage, COBRA is no longer an option. The cost of COBRA prevents many from being able to use it, but it may be a good option for employees or dependents who are facing serious medical problems or who need considerable medical services.

COBRA Alternative — Short-term medical coverage provides a good alternative to COBRA for many employees and dependents. It provides protection against the financial burden of unexpected medical expenses while in between jobs and employer group health plans. It is a more affordable health coverage than COBRA and one can often obtain coverage easily online. Typically, a COBRA alternative short-term medical plan can cover necessary medical treatment without referrals.

No Coverage — A surprising number of employees who lose their jobs opt to go without health insurance due to lack of available funds as well as a lack of information about affordable health insurance coverage. The result is often families who experience extreme financial hardship and even bankruptcy due to unexpected medical problems during a time of non-coverage. Another risk of electing no coverage is that you lose the continuation of coverage and any health problems can become pre-existing conditions for which an insurance company can deny coverage in the future, even if you again become part of an employer group health plan.

It pays to research your options and be prepared for what may happen if you lose your job or your employer group health plan. Staying abreast of issues surrounding COBRA and COBRA alternatives will arm you with the knowledge you need to keep you and your family protected and secure during uncertain economic times.

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