Is COBRA worth it? Or is there are hidden trap?

December 10, 2007 10:39 AM

Hello battle-scarred health insurance vets. Here's a COBRA question for you to ponder. I left my job in early November. My application with the Freelancers' Union to be eligible to enroll in their plans has been approved. In the time between the former and the latter, I had to see my primary care physician and refill a bunch of prescriptions. There's still time for me to elect to have COBRA coverage for the time since I left my job, but should I? Would that lead to the dreaded "gap in coverage"?

The COBRA coverage for the month after my resignation would be almost $700. If the out of pocket fee for the prescriptions and the doctor visit is less than the cost of a month on COBRA, why bother? I'm asking because I keep hearing murmurs about something called a "gap in coverage" which could affect my attempt to enroll in the Freelancers' Union health plans. I should add here that I have all kinds of pre-existing conditions and was hit by a car in June, so I'm an insurance company's nightmare.

I would greatly appreciate any insight on the best way to handle this and saving the most money without screwing myself.

posted by foxy_hedgehog to Health & Fitness (10 answers total)

not sure about the gap in coverage thing, but if your doctor's visits and scripts cost less than the 700$ COBRA would cost you, i'd just not do COBRA.
posted by misanthropicsarah at 11:02 AM on December 10, 2007

Are you sure that you've been approved for your new insurance?

Before HIPPA (Health Insurance Portability and Accountability Act), insurers could exclude anything related to a pre-existing condition for up to 12 months. Now, insurers must reduce any preexisting conditions exclusion by one month for each month that an individual can demonstrate a history of prior, uninterrupted health insurance coverage. However, if there was a gap in coverage longer than 63 days, insurance before that gap does not count.

So, basically, a gap of, say, a week, does NOT count as interrupted coverage.

IANAL, though, so I'd ask someone with the Freelancer's Union about whether or not you should get coverage for the gap period. Some insurers don't have a pre-existing exclusion clause at all.
posted by INTPLibrarian at 11:09 AM on December 10, 2007

I had to look into this when deciding whether to pay our family's COBRA premium of $1438 for September--a decision we ended up making in mid-to-late September when we had a pretty good idea of our medical expenses for the month. What I learned at the time is that new insurers can impose waiting periods on pre-existing conditions, but only if you haven't had continuous coverage--otherwise your previous coverage applies to the waiting period. You can have a gap of up to 63 days in your insurance without incurring the waiting periods, so you might not want to bother with your COBRA if your expenses would be less than your premium. This is assuming the Freelancers' Union coverage is a form of group coverage; it might not apply to individual policies.
posted by not that girl at 11:10 AM on December 10, 2007

The gap in coverage only really matters if the next health insurance (the one through Freelancers Union) restricts coverage for pre-existing conditions. I think this should help you out, assuming your profile information is accurate. If the gap is less than 63 days, there's nothing to worry about even if your next insurer does have waiting periods (etc.) for pre-existing conditions.

In general, if you have the next insurance lined up and it's going to be less than 60 days, it almost never makes sense to elect COBRA. You should just sit on the form until you have new coverage (or something bad happens which necessitates a need for the coverage retroactively).
posted by MarkAnd at 11:48 AM on December 10, 2007

http://healthinsuranceinfo.net/
posted by fructose at 11:50 AM on December 10, 2007

The other thing about COBRA is that you can retroactively COBRA. So if you're only going to have an 40 day gap, but you're hit by a bus on day 28, you might decide to retroactively COBRA. I have played the odds in the past and not had to pay the $800 for my COBRA between jobs as a result.
posted by wildeepdotorg at 3:03 PM on December 10, 2007

As others have said, it's all about the pre-existing conditions... if there are none, then it isn't an issue, if there is a possiblity, pick up the cobra coverage..

be conservative in your decision...
posted by HuronBob at 4:12 PM on December 10, 2007

When I retired (too young for Medicare etc), I elected to continue my ex-employers coverage with COBRA. When that ran out, I got private insurance. I was shocked to find out I got better coverage for less money with the private plan. Get a price check before you go with the COBRA option.
posted by richg at 4:37 PM on December 10, 2007

Ugh, COBRA. I was going to pay the $700 or so a month until I found out that it wouldn't cover anything here except for ER visits, since I moved out of state.
posted by Artnchicken at 5:51 PM on December 10, 2007

Response by poster: Great and precise and exactly what I wanted and needed. And fructose, thanks for that site reference.

All discussions about health insurance on the site serve as human evidence of how completely screwed up our efficient, free-market-solves-everything system really is. Sadly, I don't think this is going to change in our lifetimes.
posted by foxy_hedgehog at 8:01 PM on December 10, 2007