What You Need To Know About Health Insurance Options - COBRA Alternative

By Tom Carolan

If you have lost your job and health insurance, the COBRA alternative is an immediate option to continue your current insurance.

Like many people, health insurance is something we get from work and it's deducted from our paychecks. We get a card to use when we go to the doctor and all is fine. What if you lose your job? Something that is becoming more and more common these
days is families who lose their jobs and their health insurance.

Shortly after losing a job, you'll get a letter in the mail about the COBRA alternative. This will allow you to continue with the same exact health plan you had at your job. This means not having to cancel appointments or changing doctors because it's the same exact plan that you had with your employer.

A lot of how it works depends on how you lost your job:

1) Terminated for Misconduct - You don't get a discount and end up having to pay the full 100% of the insurance premiums.

2) Laid-Off - The government will cover 65% of the cost of the insurance for you.

3) Quit - You chose to leave and this means you pay 100% of the insurance premiums.

The COBRA alternative was first created in 1985 as a means to help people maintain health care coverage between jobs. The problem was the cost was immense with the unemployed person having to pay the full 100% of the insurance premiums as well as a possible 2% administration fee.

Essentially this meant having to pay more for the same service while you don't have a job. It didn't make any sense and it was not overly used by a lot of people. Many people chose to lose their health insurance altogether because they just could not afford the COBRA alternative as it existed.

The government has been stepping in recently and stated they would cover 65% of the cost of the insurance for those people who met the requirements for the COBRA alternative to job based health insurance. Those requirements being a "qualifying event" which means as long as you lost your job for reasons other than misconduct or a reduction in hours.

This step by the government has made the COBRA alternative an affordable health care choice and a viable option for many Americans. Through this system, the person does not have to worry about not having health insurance while they are in the process of looking for a new job.

This insurance is normally limited to 18 months of service however; it can be extended up to 29 months for special circumstances. When you lose your job, you have 60 days to decide whether or not to accept the COBRA alternative or not.

If you are considered a high income individual you may still be expected to pay the full 100% of your plan. Anyone who earns, individually, $125,001 year or more, is considered high income and will have to pay full price for the COBRA alternative. Joint filers who make more than $250,001 a year are in the same boat so take your earnings into account when applying for the Cobra alternative.