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Differences Between Short-term Insurance and COBRA Insurance

In 1986, the government enacted what is called the Consolidation Omnibus Budget Reconciliation Act, or COBRA. It gives employees the opportunity to continue to use their company's health insurance benefits even after termination of their job. COBRA is not offered in all cases, so a terminated employee should always follow up with their previous employer to verify eligibility. Alternatives to COBRA are short-term health insurance and private health insurance. Short-term health insurance covers a specific period of transition, while private insurance provides continuous coverage as long as it’s needed. For both of these options, it’s easy to compare rates to determine the best balance of coverage and monthly premium.

The group coverage premium that you will pay under COBRA will probably be higher than what you were used to in your regular paycheck premium deduction. This is because your former employer is no longer obligated to carry any of the premium payment. This increase in cost can make it worthwhile to compare rates on private and short-term coverage to find the best health insurance option.

With COBRA, you continue your coverage under the same terms as before, but if you do not have a spouse or children covered, it will not be possible to add them. In cases like this, private health insurance may be the best option to get them covered. If you decide that COBRA is the best option for you and your family, make certain that you work with the Human Resources department to be sure that you have everything you need to apply for COBRA once employment is terminated.