Wednesday, March 4, 2009

There's gotta be a better way than COBRA

When you lose employer health benefits either because you voluntarily or involuntarily left your job or your employer no longer offers health coverage, you're eligible for coverage under COBRA. Also known as Consolidated Omnibus Budget Reconciliation Act, COBRA, is actually a law passed by Congress in 1986 to provide continuation of group health coverage that otherwise might be terminated. Now that you know it's a law you're probably nodding your head saying "Ah, that's why it stinks", though you might choose another adjective if you like.

COBRA stinks because it's crazy expensive. It’s so expensive, in fact, that a recent estimate revealed that less than 10 percent of eligible workers were opting to continue their employer-sponsored coverage through COBRA. So in attempt to tame the reptile, the American Recovery and Reinvestment Act of 2009 will now subsidize 65 percent of a laid-off worker's COBRA premiums. That's not bad news if you can get COBRA, but more workers are finding that their companies have decided that health care is too big of an expense to offer. In these cases employees are not eligible for COBRA.

Direct from the COBRA FAQs
Am I eligible for COBRA if my company closed or went bankrupt and there is no health plan?
If there is no longer a health plan, there is no COBRA coverage available.

That also means that if your company is still in business, but has dropped coverage, you may be out of luck.

There's gotta be a better way.

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