Your Health Insurance - COBRA and COBRA Alternatives

You've just been given the bad news. The company you never thought would let you go is terminating you. And as a result, you are losing the health plan you have relied on for years. But don't worry... they tell you that you qualify for COBRA. What does that mean? Should you enroll or not? Are there any alternatives that cost less without sacrificing coverage?

There are alternatives. But, the first thing to do is to get a basic understanding of COBRA. Then find out what those alternatives may be. Once you have a good idea of what your options are, take a realistic look at your situation and make the best decision you can.
Here is some basic information to help you get started.

What is COBRA?

The first thing to know is that COBRA is not insurance. It is a law that allows you to continue your company-paid health plan at your own cost if you lose your job. You are usually eligible for COBRA if you worked for a company that has more than twenty employees and were covered by its group health insurance.

The cost of COBRA is often very high. It's because you are taking over the premiums for the insurance you have had all along through your employer at the same cost your employer paid.
If you become COBRA eligible you will receive a letter from the health plan administrator explaining how to enroll including the timing and payment requirements.
Short-Term Major Medical Health Insurance

Short-term insurance can be a lower-cost option for you. Especially if you are only between jobs, and do not expect to need to provide your own health insurance for a long period of time.
Like the name implies, short-term health insurance covers you and your family for a short period of time, usually 1-12 months. If your need is anything beyond 12 months, regular major medical health insurance is more practical.

Individual Major Medical Health Insurance.....
Regular individual health insurance is usually your best bet if you find that you have to provide your own coverage for a year or more. Like short-term health insurance, it is usually quite a bit less expensive than COBRA. Unlike short-term, there are literally dozens, even hundreds of ways to configure individual health plans to fit your needs and budget.

There are a few other options available that cost even less. Indemnity plans are a form of insurance that can cost even less than regular major medical. But, the benefits are quite limited and they provide no catastrophic protection. Discount plans are not insurance at all, but they cost very little and can give you significant discounts, often up to 50%, on your medical expenses.