5 Situations COBRA Insurance is a Good Option

The Consolidated Omnibus Budget Reconciliation Act (COBRA) is a law that requires employers to extend temporary group health insurance to former employees and their dependents, spouses and retirees. The cost of COBRA insurance is higher because the employer is not required to pay portions of the premium costs, but the employer is required to offer the group rate. In most cases COBRA insurance is more affordable than individual health coverage, and there are 5 situations where it's a good option:

1 - Preexisting Health Conditions

Health insurance companies can deny coverage based on preexisting health conditions. If you have preexisting conditions, COBRA is not only a good option, it may be your only option if you need medical coverage for treatments and prescriptions. The health insurance company under an individual health insurance plan may cover you, but at much higher rates than someone else on the same plan. COBRA insurance is a good option to keep your rates down, if your preexisting health condition would cause you to pay extremely high rates. Your preexisting health condition does not negatively impact your rates or care under COBRA insurance.

2 - In Between Jobs

If your plans are to find a new job with health care benefits, then COBRA insurance is a good option to hold you over until future benefits kick in. It wouldn't be worth it to you, in time or money, to enroll in individual health coverage and then to re-enroll in your future employer's sponsored health insurance plan. COBRA can last up to 18 months and even longer, which is often more than enough time to find another job.

3 - Dental Coverage

Many individual health insurance plans do not include dental coverage. However, most employer sponsored group health plans do, because the plans are more comprehensive. COBRA insurance is good to keep if you want dental health coverage without paying for an additional policy. It will save you more money in the end than buying your own insurance.

4 - Coverage for Family Members

Family members relying on your employer's health insurance can benefit from COBRA insurance. It's a good option, if the group insurance offered through your job was the only insurance, or the best insurance, available to your entire family. Rates for family health coverage are even higher than individual coverage, and it may be impossible for you to pay those rates. COBRA rates are costly, but nowhere near as expensive as buying private family health insurance. Preexisting health conditions for family members are covered under a COBRA insurance policy, but those same family members may not qualify for individual or family coverage.

5 - Pregnancy

Pregnancy is considered a preexisting health condition that could make you ineligible for private health insurance. COBRA insurance covers pregnancies, whether you need coverage for yourself or a dependent. You should keep the policy at least six to eight weeks after giving birth, to cover expenses for your baby's checkups.

COBRA insurance may be difficult to pay for when you're jobless. However, it is a good option, and it's worth it to create a frugal budget and find other ways to make money to pay for it.

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