COBRA

IF YOU LEAVE YOUR job and your employer has 20 or more employees, you will likely be able to continue your employer’s coverage for up to 18 months at your own expense. You will be sent a so-called COBRA notice, named after the Consolidated Omnibus Budget Reconciliation Act, giving you 60 days to decide whether you want the coverage.

Your employer can charge you 102% of the premium it currently pays. That might turn out to be a large sum. Still, you will be able to continue coverage for a while, without worrying about immediately finding a new health plan.

The 60-day decision period opens the door to a small potential cost savings. During those 60 days, you will have coverage if you have a medical issue—at which point, if you see a doctor, you would need to pay for COBRA coverage. But if you don’t use any medical services during those 60 days, you might decide not to continue coverage and instead buy insurance elsewhere to cover you after the 60 days are up. In effect, that would give you 60 days of free coverage.

If you aren’t getting coverage through a new employer, where should you turn for health insurance? That’s where the 2010 Affordable Care Act comes in. A policy bought through your state’s health care exchange will likely be cheaper than COBRA coverage. Nonetheless, it may be worth paying to keep your old employer’s coverage through the end of the year if you have already met the policy’s deductibles or out-of-pocket maximums for the year, or you’re getting close. If you buy a new policy, you’ll have new deductibles and out-of-pocket maximums to meet.

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