Unleashing the power of COBRA

COBRA has been getting a lot of attention, since lots of people are losing their jobs, and likely their health coverage.

One option is COBRA (which stands for the Consolidated Omnibus Budget Reconciliation Act, the law that created in 1985), where you can sign up to keep the coverage you had at work–but you have to pay the employer’s share of premium.

Bobby Caina Calvan at the Sacramento Bee report has a front page article on COBRA, where I point out that this can seem like a devil’s bargain, especially given that you are asked to pay the full cost at exactly the moment where many lose income. As has been pointed out before, the cost is an outrageous percentage of a standard unemployment benefit.

But let me be clear: COBRA is often the best and last option for many consumers:

* First, you get the coverage you had with your job, with the same network of doctors and providers, offering continuity of care.
* Second, you get the group rate: large employers, representing hundreds or thousands of potential “covered lives” are able to bargain for much better rates than individuals, representing just themselves.
* Sure, you may be able to buy something that has a cheaper premium in the individual market, but it likely won’t be as comprehensive. There’s a lot of “junk” insurance, especially in the individual market, that seems like a good price, but when you find out when it’s too late what it does and doesn’t cover. You are more likely to have a better, more comprehensive standard of benefits with the group coverage through your past employer under COBRA.
* Finally, and most importantly, it may be your only option, because in the individual market you can be denied for “pre-existing conditions.” Not do with group coverage, particularly COBRA.

Health Access worked to pass AB356(Chan) a few years back, so consumers were given appropriate notice when leaving group coverage, about the very real possibility of being denied for coverage. As the Department of Insurance website reads:

“Please examine your options carefully before declining group coverage or continuation coverage, such as COBRA, that may be available to you. You should be aware that companies selling individual health insurance typically require a review of your medical history that could result in a higher premium or you could be denied coverage entirely.”

It then goes on to list all the reasons you could be denied coverage, for things you may or may not know about. It’s a bit chilling.

COBRA is expensive, but it’s not just the best option for many, but for some it’s the last option. That’s why the subsidies in the Economic Recovery package are so important. The House version has more extensive help, both with COBRA, and with a Medicaid expansion… let’s see how the negotiations go in the U.S. Congress on this.

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