When Should You Use COBRA Insurance Coverage?

Published: Wed 07 Apr 2010

Wendy Blair

The Consolidated Omnibus Budget Reconciliation Act (COBRA) requires employers to offer temporary group medical coverage to former employees and retirees as well as their dependents and spouses. The cost of COBRA coverage is more expensive because the employer does not have to contribute to the premium payments, but the employer must offer the group rate. Usually, COBRA health insurance is less expensive than individual health insurance. Consider COBRA coverage if you find yourself in any of the following five situations.

1. In between jobs. If you intend to find a new job that offers medical benefits, COBRA coverage is a smart way to tide you over until your new coverage kicks in. COBRA coverage can last for as long as 18 months or more, so it will leave you plenty of time to get another job.


2. Preexisting medical conditions. Health insurers can deny medical coverage on the basis of preexisting conditions. If you have preexisting conditions, COBRA is a good option and may be your only choice if you need immediate medical coverage for your condition. You may be able to find a private health plan that will cover your preexisting condition, but the premiums for such a policy would be sky-high. COBRA coverage will help you avoid the high rates most insurers would charge you for an individual health plan on the basis of your condition.


3. Coverage for spouses and children. If you have family members who depend on the medical benefits from your employer, COBRA might be a good option. If the coverage from your employer was the best or only health insurance option available to your family, COBRA is the way to go. Remember that COBRA rates are not cheap, but they are almost always cheaper than purchasing private family health insurance, particularly if any of your family members has a preexisting condition.


4. Dental insurance. Most individual health insurance plans do not offer dental coverage, but most employer-sponsored medical plans do. You should opt for COBRA insurance if you would like to keep your dental coverage without having to purchase an additional policy.


5. Pregnancy. Insurers regard pregnancy as a preexisting health condition that may disqualify you from individual health insurance plans. COBRA coverage offers maternity benefits, whether for the primary policyholder or a dependent. Make sure you hold on to your COBRA policy for at least 6-8 weeks after you give birth to pay for your infant's check-ups.

Related Resources

• COBRA Insurance Extension Badly Needed