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COBRA: Continuing Health Insurance After You Leave a Job

If you have ever left a full-time job before, you probably got the spiel from HR (or at least a letter) informing you of your right to continue your health insurance coverage under COBRA laws.

For anybody who is laid off or quits a job that provided health insurance, it’s critical to understand how COBRA laws work and allow you to continue health insurance coverage if you need it.

If you’re simply moving from one job with health insurance benefits to the next, you don’t need to worry about COBRA. If, however, you will be unemployed or otherwise without health insurance for a period of time, listen up. COBRA allows you to elect to continue receiving your health insurance benefits for up to 18 months at the same group rate your employer was paying. Your employer should give you a document outlining the monthly costs for your healthcare plan.

COBRA health insurance, although the same as what you were receiving at work, will likely be more expensive. That’s because most employers pay for a substantial percentage of your healthcare premium—deducting only a small amount of the premium from your pay. If you elect COBRA coverage, you’ll pay the full premium.

The good news is COBRA is retroactive within the election period, which may be quite lengthy. That means if you decide not to pay for COBRA health insurance but, a month from now, fall and break your arm, you can sign up for COBRA and the insurance will be good back to the date you left work. And paying for that insurance just might be cheaper than paying for an arm cast.

COBRA provides an important safety net for laid off employees with ongoing medical needs. Healthy individuals, however, may be better served by low-cost health plans they can buy on their own that cover only major medical expenses from an accident or unexpected illness. You can compare health insurance plans at eHealthInsurance or read more about why and how to insure yourself when unemployed.

Published or updated on January 27, 2009

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About David Weliver

David Weliver is the founding editor of Money Under 30. He's a cited authority on personal finance and the unique money issues we face during our first two decades as adults. He lives in Maine with his wife and two children.


We invite readers to respond with questions or comments. Comments may be held for moderation and will be published according to our comment policy. Comments are the opinions of their authors; they do not represent the views or opinions of Money Under 30.

  1. Concerned Netizen says:

    What’s with all the spam comment links on this page?

  2. By the way, David, I really like the new color layout.

  3. Cobra is very expensive. It’s nice to have it as an option, but since a lot of insurances premiums skyrocketed this year (I know Oxford went up 30%), it’s getting to be nearly impossible to afford an entire premium. Especially if you have dependents.

    A lot of private insurance carriers are beefing up their plans and are able to offer a more affordable alternative right now. Programs like Healthy New York are looking like a pretty good idea if you’re laid off.

  4. Daniel says:

    Imee, COBRA may be beneficial but definately it is not for everyone. I’m not sure of the costs of COBRA but I’ve read that most people getting laid off can’t afford to continue health care coverage through COBRA because of the high costs. If someone has no savings and is trying to survive off of unemployment there is no way they can afford to continue health care coverage under COBRA.

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