COBRA is sometimes viewed as a necessary evil. People will sometimes say (or complain) about all the things they wish they understood before enrolling in COBRA. Today, we are going to give you a sneak peak into the 5 questions you should understand before you enroll in COBRA.
1) What does COBRA cost? (And why is it so expensive?)
While you were employed, you employer may have paid some or all of the premium for you and your covered dependents. Once you go on COBRA, you pay the entire premium plus a 2% administration fee.
Additionally, your first payment can be an extra punch to the pocket book. There is often a lag between when your group coverage was scheduled to end and when your first payment is due. This often results in an initial payment equal to two months of premium. Ouch.
2) Is COBRA my only option to maintain continuous health plan coverage?
You always have options regarding coverage. The real question is “What is important to you?” This can drive which options best meet your needs.
Let’s say you have a 30-day gap between when your existing plan ends and when coverage starts through a new employer. In this case, COBRA can be the path of least resistance and presents an easy gap coverage option.
Alternatively, you may anticipate being out of work for an extended period of time and won’t have access to a group coverage option. In this scenario, you may want to spend the extra time to research alternative coverage options through an exchange or directly through an insurance carrier.
Other factors to consider regarding COBRA coverage may include:
- What is your remaining out-of-pocket exposure for the plan year? If you have already met your deductible or maximum out-of-pocket limits, it may be advantageous to enroll in COBRA.
- What access to doctors exist with alternative plans? If you like your doctor, you may want to confirm that he/she is also available under alternative options.
3) Can I change my benefit elections?
COBRA is continuation coverage. This means you are “continuing’ the coverage you can prior to the qualifying event. However, if you elect COBRA, you will have the right to change your coverage during an annual open enrollment period.
4) Can I elect COBRA coverage at anytime?
After a qualifying event, you have a limited period of time in which to elect COBRA and make your initial payment in full. While you are entitled to 18 to 36 months of COBRA coverage, you must enroll in COBRA and make your initial payment within the required COBRA timelines.
5) If I have a new health plan option lined up, do I even need to read my COBRA notice?
There is a common misconception that COBRA only applies to your health plan option. This is false. COBRA coverage is available for more than just medical insurance.
Any employer-sponsored benefit is potentially eligible for COBRA coverage. This includes: medical, dental, vision, Medical Flexible Spending Accounts (Medical FSAs) and Health Reimbursement Accounts (HRAs) to name a few.
So if you want to understand what it might cost you to keep some of these benefits, you are going to need to open and read your COBRA notice.
Final step, enroll in COBRA
If you made your assessment and determined COBRA is the right option for you, the only thing left to do is to enroll in COBRA!