People talk about COBRA insurance all the time but most people have difficulty defining exactly what COBRA is and isn't. In fact, unless you have been on COBRA insurance before or work in the health insurance industry, you likely have a misunderstanding about what it really is. Additionally, there are many misconceptions about how COBRA works, who can use it, and what it actually does and doesn't cover. This article will help you understand exactly what COBRA insurance is as well as uncover some common myths and misconceptions about COBRA.
COBRA Insurance: A law passed by the federal government in 1986 that gives individuals and families the option to continue to use their employer sponsored health plan if they meet three conditions: qualifying plan, qualifying beneficiary, and qualifying event.
Myth #1: COBRA is a brand new health insurance plan from the government.
Fact: COBRA isn't a health plan, it is a law. In 1986, the government passed a piece of legislation known as the Consolidated Omnibus Budget Reconciliation Act. In this legislation, an option was created to protect people from suddenly losing medical insurance after job loss. This became known as COBRA. Under this law, people have the option to keep their employer sponsored plan for a limited period of time if they meet certain conditions. The plan stays exactly the same since it is the same plan used while the person was employed.
Myth #2: COBRA is only for people who were laid off from their jobs.
Fact: COBRA insurance is for people who were laid off, quit, or retired from their jobs. Additionally COBRA can extend to family members when the covered employee qualifies for Medicare, in the event of the death of the covered employee, in divorce from the covered employee, or in the event of loss of dependent status.
Myth #3: If I qualify for COBRA I should definitely sign up and use it.
Fact: COBRA is just one of many health insurance options, and can be very expensive. Even though COBRA is a solid option for many, it is often much more expensive than other plans on the market, specifically who people who are generally healthy. Although COBRA is the best option for some, it isn't for everyone. You should always investigate private plans and governmental plans before enrolling in COBRA.
Myth #4: I can use COBRA coverage if my company went out of business.
Fact: COBRA coverage only exists when the company plan is still active. If the company you worked for goes out of business or stops offering health insurance, there is no longer a COBRA option. The plan must still be active and the company must still be open for COBRA to work. If your company went out of business, you will have to look for private insurance plans for coverage.
Myth #5: COBRA is the only option if I have health care needs.
Fact: You may also qualify for government programs or PCIP insurance plans. Many people think if they have a preexisting condition, COBRA is the only option. However under the new health care laws, people with preexisting conditions may also qualify for government plans and PCIP plans. Some of these plans are less expensive than COBRA.
Myth #6: To use COBRA, everyone on the plan must enroll in the program.
Fact: You can enroll as many people as you choose in COBRA. Many people believe that if you choose COBRA, it means that you are choosing it for the entire family. However you can actually make an individual decision for each person. Many families save money by only using COBRA for family members with serious health needs and then finding a private plan for everyone else.
Myth #7: COBRA is a cheaper option than private health plans.
Fact: You can save 65% with a private insurance plan. Health insurance is expensive, but for people without serious medical needs, COBRA is actually more expensive than a private plan. Since employer plans cover everyone and normally cover people with serious medical needs, they are expensive. However when you sign up for your own plan, the insurance company can offer lower rates since they are only covering your needs.
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