COBRA is becoming increasingly more important as more people find themselves in a position where they need to move on from a job that you’ve been relying on for health insurance. Whether you’re job hunting, taking an entrepreneurial route or finding some combination that works for you, health insurance is bound to be an important question.

More than COBRA Basics

The idea behind COBRA is fairly well known. The federal government passed a law that requires insurance companies give employees the ability to continue health insurance coverage after they leave a job. The exact amount of time a person can hang on to COBRA coverage after leaving a job varies and coverage can be expensive — but under the American Recovery and Reinvestment Act of 2009, it’s possible to get a subsidy towards COBRA coverage.

But understanding your access to COBRA coverage requires a little more knowledge than the basics. Even signing up for COBRA can be difficult — and if you need the new subsidy, it’s even more complicated. The first step is making sure that you can qualify for both COBRA and the subsidy: both are administered through your former employer and that company’s health insurance plan. If you qualify for another insurance plan, like Medicare, a plan with your spouse’s employer or another group healthcare plan, you are ineligible for the subsidy.

Alternatives to COBRA

Continuing your health insurance under COBRA can be extremely expensive. While you’re employed, your employer covers the largest portion of your costs, but when you’re covered under COBRA, you’re responsible for the full premium amount. It’s expected that the subsidy, which will cover up to 65 percent of your premium for 9 months, will help significantly, but you’ll still be stuck with a pretty significant cost.

There are alternatives to using COBRA coverage, including purchasing private coverage for yourself and your business. In order to answer your questions about how COBRA and private health insurance stack up, eHealthInsurance has set up a website offering extensive information about both COBRA and individual plans at www.cobralearning.com. Most importantly, the site offers a checklist of when to choose COBRA and when to get a plan of your own.

Consider COBRA if:

• You are pregnant or plan to become pregnant within the COBRA coverage period
• You have a pre-existing medical condition
• You are taking prescription medications, need to undergo a medical procedure in the near future, or need extensive medical care
• You have recently been declined for private health insurance

Consider purchasing an individual and family plan if:

• You are in relatively good health
• The COBRA option is too expensive
• You are seeking health insurance coverage beyond the COBRA term (typically 18 months)
• You are seeking a low-cost short-term plan, such as a 90-day individual health plan

The site also offers calculators to help you determine the subsidy you might receive towards COBRA coverage, as well as premiums for private plans. Equally important is the information on switching between COBRA coverage and a more long-term solution — if you decide not to move back into a job that offers health insurance as a benefit, you may need to purchase a private plan.

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