Why COBRA Isn’t Always Your Best Choice

When an individual leaves an employer that had health insurance, he or she is often offered COBRA as a means of continuing that coverage – at least for a certain period of time.

In many cases, this may make sense to the individual, especially if he or she is not going directly to another place of employment that will offer the person medical benefits.

COBRA, named because it was created under the Consolidated Omnibus Reconciliation Act, allows the individual to continue coverage under the former employer’s health insurance plan as a way to avoid a lapse in health insurance benefits.

While this program may offer peace of mind in maintaining health insurance coverage, it is important for individuals to really weigh the pros and cons, as there are several reasons why going this route may not be the best option.

Following are some reasons for not using COBRA:

Premium Cost: One of the primary reasons for opting out of COBRA has to do with cost. Typically, the cost of maintaining coverage through COBRA will be more than the amount of premium that the former employee was paying while he or she was still working.

In addition, COBRA premiums cannot be locked in. This means that because COBRA insurance is simply a continuation of an individual’s group health insurance plan, any changes to that plan – including a premium increase – will also affect the cost of the COBRA premium.

Temporary Coverage: Should the individual not be obtaining a more permanent health insurance policy in the near future, he or she should be aware that COBRA benefits typically last only between 18 and 36 months. Therefore, this should not be considered an ongoing health insurance plan.

Before leaving an employer that has a health insurance plan, it’s important to know all the facts about COBRA in order to make a determination as to whether it’s the best option for health insurance coverage.