What is COBRA?

What is COBRA

Well in this case it's not a venomous snake. COBRA stands for Consolidated Omnibus Budget Reconciliation Act and is a Federal Law that requires most companies to allow most of their employees to be covered by the medical insurance that was offered by their employer should they lose their job. It does not allow you to continue your plan 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 cost. In fact, you may see the amount that you pay increase by up to 102%.

What are the Benefits?

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

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 continue that coverage, primarily because they are unprepared in the sharp increase in premiums that they are required to pay. Depending on the generosity of your former company, you could find the premium that you were used to paying out of your check more than doubling. The primary candidate for this is the person who has medical issues or issues in their family that need continued service or may make getting a new plan difficult. Such pre-existing conditions can make the drastic increase in costs seem much more worthwhile.