COBRA Coverage and Short-Term Insurance Compared

Short-term health insurance may be a lower cost alternative to COBRA, but it may not work for you, depending on several factors such as pre-existing conditions.


Short-term Health Insurance vs. COBRA


If you qualify for COBRA insurance, your previous employer will send you a notification letter, but can you afford the cost? The premium varies with individuals, depends on how much coverage you need (for yourself or for your family), and may be more cost than it’s worth. Once you receive the COBRA notification letter, you have 60 days to make a decision to accept the insurance or not. According to federal HIPAA regulations, if you decide to wait on your COBRA coverage, you will not have a lapse in coverage during this time. Prior to receiving the letter, you can scout short-term health insurance plans to get an idea of how much they will be. By the time you receive your letter, you will have a better idea of the costs and may even qualify for your new health plan. However, if you choose to obtain short-term health insurance, this may disqualify you from HIPAA eligibility if something were to happen while waiting for your short-term health insurance coverage or your group plan coverage from your new employer.


Short-term health insurance rates vary and it’s in your best interest to look at several policies before deciding on one. One factor to look into is to see if the short-term coverage will cover pre-existing conditions. Most aren’t covered along with routine doctor visits, but unexpected illnesses and accidents would be covered. In many cases, you will be covered within days after answering a few health questions. It’s a low-cost option to COBRA for any temporary health insurance needs. What you will need to do is make sure the short-term coverage is creditable, so search with caution about what you purchase.


When Should You Keep COBRA Coverage?


You should consider keeping your COBRA coverage in the event any of the following apply to you:

  • If don’t want to lose your comprehensive benefits.
  • If you want to keep the continual, guaranteed coverage.
  • If you’ve had ongoing health problems or pre-existing health issues.
  • If you’re medications are expensive.
  • If private insurance declines you.
  • If you’ve had health problems recently develop.
  • If you have a history of medical problems.
  • If you’ve had an accident within the 60 day window of enrollment.
  • If you’re pregnant or plan to become pregnant.
  • If you’ve found a new job, but your employer doesn’t offer a health plan.

The best thing to do is wait to see what your COBRA premium will be and compare it to the short-term plans you’ve researched. If the savings aren’t substantial, it might be in your best interest to choose the COBRA plan.


What happens to my COBRA health insurance if my previous employer goes out of business?

COBRA health insurance can be a valuable insurance option if you should lose your job. This type of insurance coverage is designed to help you bridge the gap in coverage when you move from one job to the next. However, if your employer goes out of business, you can lose your coverage altogether. The benefits will stop because the the original insurance provider went out of business, therefore disbanding the original group. Your previous employer does not have to continue carrying health insurance if they can no longer continue regular business operations.

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