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You lost your job, and that means you lost your health insurance too. If you’re younger than 26, you can just hop back on your parents’ plan if they have one, but if you’re older you’ll have to navigate some other options, and it can get pretty confusing.
One word you’ll hear a lot is COBRA, and no, we’re not talking about the snake.
COBRA stands for the Consolidated Omnibus Budget Reconciliation Act, passed in 1985. It requires any private company with more than 20 employees that already provides health insurance to offer continuation coverage.
This means if you get laid off, your company can’t just take away your insurance plan.
To be clear, COBRA isn’t a type of plan, it’s just the legislation that requires a company to continue to offer you access to the group insurance. However, COBRA doesn’t last forever. You’re eligible to stay on your work’s plan for 18 months. Being fired for gross misconduct waives your eligibility for continuation coverage.
After those 18 months, you’ll have to find your own insurance. There are a few circumstances where you might have more time. if you become eligible for Medicare or get divorced, your spouse (or ex) and any dependent children will have 36 months of Cobra eligibility. Dependent children who turn 26 will be able to stay on your plan for 36 months.
The most important thing to know about COBRA is the cost. Most employer-sponsored insurance plans have a decent chunk paid by the employer. COBRA lets you stay on the same plan, but you’ll have to pay the full cost, even the company’s portion. That can jack up your monthly premium quite a bit.
Health care has changed a lot in the past 32 years since cobra was passed, but COBRA has largely remained the same. Staying on the same plan means you can keep your doctors, but there may be a more cost effective ways to insure yourself.
If you’re relatively healthy and don’t need any specialty care, it may be better to get a new plan on the health care marketplace. Just remember you’re subject to a fine if you don’t get any insurance.
Make sure you do your research before you make any big health insurance decision.
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