My friend recently quit his job. It was a contract job, so the insurance wouldn’t become effective for six more months. He was concerned about his diabetes and wanted to know the options available. He wanted to know how he could continue receiving health care, even if he had to spend a little bit more.
He asked us questions about these things and we had no choice but to tell him the truth. COBRA can be a useful tool if you don’t have any other options. It is important to do your research and find an affordable insurance company. It is possible to purchase a temporary policy for yourself while you are not covered by your regular insurance. COBRA can be expensive. You cannot reduce your COBRA coverage. This could mean that you end up paying more for things you don’t use to keep your healthcare coverage.
Why is it important to have healthcare coverage? Most policies include a clause regarding pre-existing conditions. Pre-existing conditions can be different from one policy to another. Before making any decisions, make sure you carefully read both your current policy and your new policy.
Pre-existing conditions: Any illness or condition that you have not had insurance for at least 30 days is pre-existing and will be excluded from your current policy. Pre-existing conditions can include any condition that is lifelong, such as epilepsy or diabetes. Your current healthcare policy can exclude your pre-existing condition from coverage, even if your monthly premiums are paid.
He realized that private insurance would cost him a lot each month due to his medical condition. We recommend that people use a spouse’s work policy. You can leave your job as a “Life Change” and bypass most policies’ once-per year change of coverage clause. His wife, however, does not work. His household is dependent on him as the only income source. We recommend that he use COBRA to cover all of these factors.
What is COBRA? It stands for Consolidated Omnibus Budget Reconciliation Bill. It is usually meaningless to laymen. It is simply a continuation to benefits federal act. It is the part that affects us states: If you have insurance at work and you have more than 20 employees, they must provide the same insurance coverage as you had under their policy for 18 months. These are the caveats:
- The amount of coverage you get cannot be changed. You cannot cancel COBRA coverage if you were already covered for the work before you leave.
- You can cancel the policy at any time. Do not miss a payment. Don’t let go of the program until you have been fully covered by another policy or.
- Only a small window of 30 days remains before you can elect COBRA coverage.
- COBRA coverage is available to you but it doesn’t take effect until you have signed up in writing.
- The final catch is that you pay 100% of your monthly premiums.
Most employers will graciously pay a portion of the monthly premiums. This is usually between 40% and 75%. Rarely, employers will pay more than 90% of monthly premiums. If you choose COBRA coverage, however, you agree that you will pay the entire monthly premium at your own expense. Don’t forget to make your monthly payments on time. They can cancel your account immediately and you will not be able to sign up for another month.
COBRA coverage is not automatically offered just because it must be provided to you. You must agree in writing to COBRA coverage and complete the required paperwork. Talk to your HR department about the documentation required for your specific insurance.
All of this information was presented to him and he decided to keep his COBRA coverage for six months, until his next insurance policy became effective. He spent over $1000 per month on his wife, four children and himself. Although it sounds expensive, he paid the price to avoid any “pre-existing conditions” clauses and to be ready should anything happen within the six-month period.
COBRA is available to assist you if you are looking for a job or a change in your job. You can often find cheaper insurance options, such as a spouse’s policy or a private label. COBRA can be a viable alternative in certain cases. While it can be costly in the short term, COBRA will save you money over the long-term.
