Is COBRA Coverage Necessary?

COBRA stands for Consolidated Omnibus Budget Reconciliation Act and is a Federal Law that requires most employers to to continue to cover their employees under the product that was offered by that employer should they lose their job. COBRA does not allow you to continue your insurance at the same premium that you may have been used to paying while working with your employer. Your company is not required to continue paying their part of your plan's premium. In fact, you may see the amount that you pay for the premium increase by up to 102%.

What are the Benefits?

Depending on your circumstances or those of your family, COBRA could have immense benefits. If there is an illness in your family that developed while you were working with your company, you may have difficulty getting them on a new plan that you find after your employment ends. It will allow you to extend the same coverage you had throughout your employment without having to reapply for a new policy or submit to medical exams and applications. Another advantage is that it can save you from having to search for the policy you are used to, or looking for a new doctor with a new policy during the transition period between jobs. Many people find it very efficient to simply stay with the same medical plan they had with their former employer as they transition finding a plan with their new company.

So Do I Need It?

The vast majority of people who lose their employment and the benefits attached to it opt not to use their COBRA to extend that coverage, primarily because they are unprepared for the sharp increase in amounts that they are required to pay. Depending on the generosity of your employer, you could find the amount that you were used to paying out of your check more than doubling. The primary candidate is the person who has medical issues or issues in their family that need continued monitoring or may make getting a new policy difficult. Such pre-existing conditions can bring the drastic increase in costs seem much more worthwhile.