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Is COBRA Insurance Right For Me?

Posted on: April 25th, 2012 by Cobra Insurance Guide

COBRA Insurance and Taxes

COBRA insurance is a great health insurance option for people who are absolutely sure they will soon have health insurance again, have preexisting medical conditions that make it difficult to qualify for other health insurance plans, or can financially afford to keep their current plan and benefits. However, for most of us, COBRA insurance many not be the best option and there may be alternatives that can provide us with similar coverage for much less money.

To better understand is COBRA health insurance is right for you, let’s first take a look at who is eligible for COBRA insurance.

Qualified Employee Beneficiary Qualifying Event Cost Term

Previous employer had at least 20 employees

Previous employer had a health insurance plan

Previous employer was not the federal government

Employee, spouse, and/or dependents Voluntary (quitting, retiring) or involuntary termination of employment OR reduction in work hours 102% of the entire health insurance premium 18 months
Employee, spouse, and/or dependents Termination OR reduction of work hours along with a disability certified by the Social Security Administration 102% of the entire health insurance premium for first 18 months, 150% for next 11 months 29 months
Spouse or dependent children Death of employee, Divorce or legal separation, Loss of “Dependent Child” status, OR Employee enrollment in Medicare 102% of the entire health insurance premium 36 months

Once you know if you are even eligible for COBRA, the next decision is whether or not COBRA insurance is right for you. Generally you should consider COBRA health insurance if you are:

  • Have a preexisting condition
  • Have been declined from health insurance plans in the past
  • Are pregnant or plant to become pregnant in the near future
  • Take expensive prescription medications
  • Will be undergoing a medical procedure in the near future
  • Normally need lots of medical care

On the other hand, there are many instances when COBRA insurance may not be right for you. Those include:

  • Families and individuals in good health
  • People who will need insurance longer than the term given with COBRA
  • People who can’t afford COBRA or want a cheaper option
  • People who know they will soon be employed and want a cheap, short term option

Additionally it is always important to remember that you can make individual decisions for different family members depending on your needs and budget. If only one family member has a preexisting health condition, you may sign them up for COBRA insurance and then sign the rest of your family up for a more affordable individual health insurance plan. COBRA insurance can be used for the entire family or just particular members. It can also be dropped at any time.

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