The #1 thing you need to know about COBRA insurance if you leave your job


You may know that when you leave or lose a job, you have the option to purchase health insurance under the Consolidated Omnibus Budget Reconciliation Act (COBRA).

This stopgap insurance option exists so you don’t have to go without coverage before getting it through your next employer.

But did you know that you don’t have to pay the premiums on a COBRA policy unless you need to use it?

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COBRA tip: Don’t pay until you need health services

COBRA can be a lifesaver if you expect to incur overwhelming medical bills while you’re between jobs. But it’s not exactly cheap.

Yet, at a time when money may already be stretched as you transition from one position to another, there is another way.

With COBRA, you’re charged 100% of the full monthly premium you’d been paying before your date of job separation, plus a little extra.

A job separation is defined as being fired, laid off or just up and quitting your job.

That little extra amounts to 2%. So, under the law, your employer can charge up to 102% of the premium you’d been paying previously.

That can be a budget buster for people who may already be struggling while they’re between paychecks.


But here’s the good news: You don’t immediately need to rush to sign up for COBRA. You have 60 days to do so, according to the Centers for Medicare & Medicaid Services.

If you’re generally healthy and you know you only have a short gap between when you left your last position and when you’ll qualify for new health care coverage, you might consider waiting to sign up until the end of the 60-day enrollment period.

The coverage will be retroactive back to the date of job separation.

However, you should know that once you elect to start COBRA within your 60-day window, you’re responsible for premiums back to day one.

“In other words, if you sign up on day 59, you still have to pay all the premiums from the 59 days,” notes.

Still, it’s something to consider if the situation makes sense for you. Think of it as taking the wait and see approach!

Final thought

Again, doing this is not advisable if you have a medical condition or know you need frequent medical care.

But if you’re reasonably young and healthy, you may consider deferring COBRA benefits within the allowed 60-day window until and if you really need them.

It just may help keep a little more money in your pocket!

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