The Pros and Cons of COBRA Continuation Coverage

COBRA continuation coverage is a program that was enacted by Congress in order to allow continuation of medical coverage. This program carries with it some advantages and disadvantages. Here is a look at some of the pros and cons of COBRA continuation coverage.


COBRA continuation coverage can provide several benefits to individuals. If you change your employment situation for any reason, you will be able to continue your health coverage on the same group plan. For example, if your employer decides to terminate your job, you will not necessarily have to immediately find new insurance coverage. You can stay with the same insurance provider and the exact same plan. This provides a nice source of stability and continuity to those that are in a transition period between jobs.

Another advantage of this program is that the process for filing claims does not change. If you have a medical problem, you will simply use the same insurance card that you have always used. There is no need to go through any different claim filing process or learn new rules.


Although this program can be beneficial when you lose your job, it is not perfect. One thing that presents individuals with problems is the limited time frame that you can keep the coverage. In most cases, you can keep using COBRA for a maximum of 18 months after ending your employment. If you have a disability, you can extend this coverage. However, during a down economic time, you may not be able to find another job with health coverage in that amount of time. Therefore, this could potentially leave some individuals without insurance.

Another disadvantage of this program is the cost associated with it. Whenever you are an employee, your employer will usually subsidize part of your health insurance premium as part of your benefits package. However, whenever your employment is terminated, this benefit will no longer apply. This means that you could be paying substantially more for your health coverage than you were before. For those that do not have a job, this can present a large potential problem for them. Most people do not enjoy paying their premiums when their employer is paying for part of them. However, when that amount is potentially doubled suddenly, this can be a very bad situation for the individual.

In some cases, you may even be charged an administrative fee because you are using COBRA. Some companies will charge you as much as an additional 2% on top of your premium just because you are using COBRA. This presents even more challenges for those that are strapped for cash.

If you work for a company that has less than 20 employees, you may not be able to rely on COBRA for your health coverage needs. The COBRA program is designed for companies that have more than 20 employees. Therefore, you may be forced to find another source of temporary health coverage.

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