COBRA Insurance provides a buffer for employees, their spouses, and dependents to have continued health insurance after qualifying events occur. These qualifying events include the death of the covered employee, the termination or reduction of hours of the covered employee (unless the termination is due to a gross misconduct), the divorce or legal separation of the employee by the employee’s spouse, or the discontinued health coverage due to the eligibility of the employee for Medicare benefits. COBRA insurance can be really great and important for employees and their families, but there are also some downsides to the law.
Pro: Buffer from Sudden Change
The goal of COBRA insurance is to avoid leaving people out to dry without health insurance when really big, negative life events happen, like the death of a family member or the loss of a job. The creation of COBRA was vital, because it takes some of the pressure off of people when bad news hits.
Con: Only a Certain Amount of Time for Continued Coverage
One big downside to COBRA insurance is that the continued coverage doesn’t last forever. In case of termination, the continued COBRA only lasts 18 months. In times of economic downturn, it might be difficult to find a job within that time frame, so there’s definitely still a heavy pressure on employees who have been suddenly terminated.
Pro: Same Plan, Same Filing Process, Same Coverage
Not only do employees and their beneficiaries get continued care, but it’s the same care they had before. Under the Affordable Care Act, employees and their loved ones have other options outside of COBRA, but that also means changing plans and the filing process changes. This can add extra stress. Under COBRA, all of your claims are the same, and you get the same plan as you had before.
Con: Hefty Costs
The biggest downside to COBRA is that even though continued coverage is guaranteed, it usually means the employer will no longer be paying your insurance premiums. In some case, you may have already been paying the premium, but without a job or with a loss of income, this can still be a financial burden. Some health plans will even charge you extra for using COBRA insurance. Under the COBRA guidelines, you may be subject to up to 102% of the insurance premium.
Pro: Covers You and Your Loved Ones
Not only does COBRA protect you if you’re terminated; it also helps you rest easy knowing that your family will be taken care of if you die suddenly. Additionally, it protects spouses in the case of divorce.
Con: COBRA May Not Apply to You if You Work for a Small Company
You are only eligible to receive COBRA insurance if you work for a company that insures 20 or more employees. This leaves little assurance for people who work for small companies.