COBRA is a health insurance option that is mandated by the Federal Government. It was created in an addendum to a budget bill. COBRA allows employees who are receiving employer sponsored health care to continue their coverage after their employment is terminated for a certain amount of time if they pay for it out of their own pocket. While COBRA is the best option for some individuals, this is definitely not the case for everyone. It is important that you look closely at all your options before making your decision.
The main reason why someone would want COBRA benefits is the existence of a pre-existing condition. Pre-existing medical conditions can drastically drive up the cost of health insurance. Some conditions are so severe that no private insurance provider will take the risk of insuring an individual at any cost. At the very least, most insurance companies will not cover any expenses arising from a pre-existing condition, meaning that those expenses will have to be paid out-of-pocket. If an individual or a member of his or her family has a condition that is covered by their COBRA benefits but would be a pre-existing condition under a new policy, COBRA is likely that individual's best, and possibly only available option.
For most individuals, COBRA is probably not the best option. The reason for this is cost. Most employers get their plans at a discounted rate because they purchase so many plans. Many of these plans would be prohibitively expensive for an individual to purchase on their own. Additionally, COBRA makes it legal for insurance providers to charge an extra fee to continue a plan for COBRA. This means that you will be overpaying for an already expensive plan. There are thousands of available health insurance plans and providers in the United States. The chances are very high that there are multiple plans that can be found for less money and more tailored coverage than any COBRA benefits that can be purchased.
If you are relatively healthy and have few health care needs, you can get a high deductible or catastrophic plan that can tide you over until you find a new job. These plans tend to be very affordable but do leave you vulnerable to paying a large deductible should anything happen. You can purchase policies with lower deductible amounts, however as the out of pocket expenses get lower, the premium prices will rise.
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