Is Your Cobra Insurance Coverage Set To Expire
Right now, many individuals are at a crossroad when it comes to their health insurance. During this exasperating recession, people found themselves laid off from their jobs suddenly, and, in a scramble, elected to stay on their former employer’s health insurance plan through COBRA instead of finding alternatives to Cobra Insurance Coverage .
COBRA, Consolidated Omnibus Budget Reconciliation Act, is a law that requires employers to offer continuation of the health insurance coverage offered by their former employer in the event of the employee’s involuntary termination from his job. Cobra Insurance Coverage is temporary, usually for a period of 18 months, and the premiums due under the COBRA medical plans are the responsibility of the individual, not the employer. This means that the individual pays both his employee share and the employer share of his and his family’s health insurance.
Congress was aware of this burden on individuals, and accordingly, in February of 2009 President Obama signed a law subsidizing COBRA, as of The American Recovery and Reinvestment Act. This law was set to expire December 31, 2009, but was briefly extended to for individuals that were laid off prior to May 31, 2010, for a period of 15 months of subsidy.
This subsidy was a significant relief to people who needed insurance after they were laid off from their jobs, because, again, COBRA health insurance premiums are very expensive for individuals, require a 2% administrative fee, and continued participation in an employer sponsored plan. These facts have always made COBRA an unattractive option for individuals needing insurance, but the Cobra Insurance Coverage alleviated the burden of the expensive premiums for COBRA by subsidizing 65% of that premium.
This means that if you have been enrolled on COBRA for some time or if you have lost your job after May 31, 2010, there is no subsidy available for electing COBRA. To put it plainly, it is time for you to make a choice for yourself and the family covered under your health insurance plan. You can:
1) Continue coverage under Cobra Insurance Coverage and pay the expensive premiums
2) Let your medical insurance lapse and have no health insurance at all
3) Join your new employer’s health insurance plan
4) You can purchase your own private health insurance plan, as an individual.
So, weigh your options….
Option 1 – continue coverage under COBRA
COBRA is a fine band-aid, especially when subsidized, but Cobra Insurance Coverage offers you and your family no permanent solution. Even subsidized it is temporary and lapses after 18 months, at which point you will have to decide between no insurance or your own insurance, unless you are able to join your new employer’s plan.
This is a plan that you did not design, and was not intended to serve your family alone. Accordingly, you may be paying an expensive premium for insurance options that you do not need individually, but were necessary as part of a group plan.
Option 2 – let your medical insurance lapse and have no health insurance
The idea of being without insurance in the event of an accident or unexpected illness does not seem like a wise choice for any individual or his family, especially children. Unfortunately, too many people find themselves on the receiving end of some very bad news from their doctor. Such news is, inevitably, far worse when treatments, prescriptions and doctors recommendations cannot be followed because of a lack of insurance.
Health reform is underway, but there is not expected to be a concrete government plan available to individuals for some time. And what the plan will look like is to be determined. With so many unknowns, waiting for government-sponsored insurance is not feasible.
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