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COBRA Coverage Explained

COBRA is the acronym for a health insurance portability act signed into law during the 1990′s. Thanks to COBRA, if you leave an employer who is providing your group health insurance coverage, you can keep the coverage for 18-36 months even though you no longer really qualify for the group coverage since you are not a member of the group. COBRA is a great benefit to many people-but not every employee who leaves an employer with group benefits should take advantage of COBRA coverage.

COBRA coverage is extremely expensive. If you are someone in relatively good health, who rarely goes to the doctor and has no pre-existing conditions, then COBRA coverage might not be the best use of your financial resources. Instead, you could search for low cost health insurance on an individual basis and get your own policy, not hinged on group participation, that can cover you for a fraction of the cost of a COBRA policy.

For individuals with pre-existing conditions, low cost health insurance is a pipe dream. Not only are premiums expensive for formerly ill individuals, but they may not even approve you at all depending on the risk you present. Or, they may approve you and agree to pay for your medical expenses through your policy while excluding a whole host of expenses that stem from your pre-existing condition. It is then that you are a good candidate for retaining your COBRA coverage. Even if you never go to the doctor, keeping continuous coverage through a program like COBRA is vital because it prevents another group insurance plan from declining to cover your pre-existing conditions (something they cannot do unless you’ve had a break in coverage for 63 days or longer during the past 6-12 months).

So remember, if you are young and in relatively good health, look to a low cost health insurance policy of your own for coverage after leaving a group plan. It will be much less expensive that COBRA and will allow you complete portability since its approval isn’t tied to group participation. If you have a pre-existing condition, be sure to opt for COBRA coverage immediately after leaving your job so that there is no risk of a 63 day or longer break in coverage. No matter what option you choose-make sure you always have some sort of health coverage so that you are not left to fiscally stand alone after an expensive illness or injury.

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