When you leave a job that provided health insurance, making a plan to continue coverage is one of the most important things you can do. Without health insurance, a serious accident or illness could cost you hundreds of thousands of dollars in medical bills. And even getting more minor care becomes expensive without insurance plan discounts.
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One of the options that will likely be available to you once you leave your job is to stay on your employer’s plan. You can do this because of the Consolidated Omnibus Budget Reconciliation Act of 1985, or Cobra. as long as you were covered on the last day of your employment, you have up to 60 days to elect cobra coverage and can stay on your employer’s plan for up to 18 months, or up to 36 months in the event of a disability or second qualifying incident .
Reading: How good is cobra insurance
But while you can use the coverage you collect and stay on your employer’s plan, it’s not always a good idea. You should carefully consider the pros and cons so you can make an informed decision about what’s best for you.
the problem with the coverage charges
The big problem with cobra coverage is that it tends to be very expensive. Chances are good that your employer subsidized at least some of your insurance premiums while you were employed. this almost always stops when you leave your job, unless you have negotiated continued payment of health insurance by the employer as part of a severance package.
If your employer was picking up some or all of your coverage and stops doing so, you’ll suddenly be responsible for paying the full cost of your insurance. and this can be a huge bill. When I left a job that gave me 100% coverage and 50% coverage for my spouse, our premiums would have gone from $250 a month to $1,000 a month if we had chosen the cobra coverage.
Paying the very high cost of cobra coverage may simply be unaffordable at a time when you no longer have a job.
the advantages of cobra coverage
Of course, there are definitely benefits to cobra coverage. First and foremost, employer-provided plans are often better than anything you can buy on the private insurance market.
Depending on the quality of the plan you had at work, it may be impossible to get coverage that has as wide a network, as low a deductible, or as low an out-of-pocket limit as you had before. this is what my husband and I discovered when we started looking for private insurance coverage.
If you keep your plan on charge, there will also be no gap in your coverage or care. you will get the same benefits you had before. If you’ve already met your deductible, you won’t have to start the year over and you won’t have to worry about changing doctors.
explore your other options
When making the decision to keep cobra, you should also think about your other options, as any other type of insurance available to you will likely make a big difference in your decision.
If your spouse gets coverage through your workplace, find out if you could add them as a dependent. if so, your spouse’s employer may subsidize some or all of your premiums. And because that coverage would be provided by the employer, it might offer better policies than the individual market.
You should also check out the policies sold on the obamacare exchanges. losing your employer-provided coverage is a qualifying life event that makes you eligible for health insurance outside of open enrollment; this means you could sign up for a policy right away. And, depending on your income, you may be eligible for subsidies that significantly lower your premium costs. the policies available to you in an obamacare exchange can be much more affordable than the coverage you charge.
when comparing obamacare policies or coverage available through your spouse’s workplace, consider how the coverage compares to insurance provided by your employer. If you go from a policy with no deductible to one with a $6,900 deductible, even if the premiums are lower, you could end up spending more in total if you really need care.
see the big picture
As you can see, there are a lot of things that go into deciding if paid coverage is the right choice for your health insurance when you leave your job. be sure to explore all of your options before deciding. Also review premiums, subsidies, deductibles, and copays, and whether plans allow you to keep your doctor.
By looking at the big picture, you can find the insurance that’s right for you. remember, you have 60 days to choose cobra, so you have a little time, but don’t wait too long to decide.