The economy, or even a change in career path, could cause you to be faced with decisions regarding the issue of maintaining your health insurance coverage. Group health insurance plans generally stop when your employment ends. Only through COBRA (Consolidated Omnibus Budget Reconciliation Act) do you have the option of continuing coverage under the former employer's group insurance plan for up to 18 months.
This option is generally made available only to persons that were covered under a plan that covered 20 or more employees. Should you elect to choose the COBRA option and remain covered under the group plan? This option of portability has some advantages and disadvantages.
The cost of the COBRA option is expensive since you are bearing the full cost of the premium. The employer does not subsidize the premium in any way and may even charge an additional administration fee. Healthy individuals and families can purchase personal health insurance plans less expensive than remaining on the employer plan through COBRA.
COBRA can only be used to extend coverage for a certain period (generally 18 months). A healthy person takes a possible chance of developing a serious health problem while being on COBRA and having their coverage period expire. While HIPPA (Health Insurance Portability and Protection Act) guarantees portability to a personal plan in certain situations, a serious health problem would cause the premiums to be much higher on the personal plan. Having a personal plan that can be kept on a permanent basis eliminates this problem.
The main advantage of portability is for those with serious medical conditions. Having the ability to elect COBRA and then transition to a personal plan after COBRA ends is important. This means that the insurance company cannot decline someone's waiting period for pre-existing medical conditions.
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