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Top 3 Reasons Why Short-Term Health Insurance Is Better Than COBRA

When you’re facing a loss of medical coverage due to temporary gaps in employment or another factor, purchasing COBRA coverage could initially seem like the right choice to protect your health and finances. Under COBRA Act, employers with 20 workers or more are required to offer an opportunity for former employees to continue paying out-of-pocket for health insurance coverage.

COBRA is definitely far from cheap, however, costing 100 to 150 percent of your monthly premium, for an average of $13,000 a year. Short-term health plans are often a better alternative to COBRA especially when you’re facing a need for immediate care or your finances are tight.

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Temporary health insurance is a popular, affordable solution to cover gaps in coverage while you are between Major Medical plans.

*Eligibility for short term medical insurance is based on age and state availability.

1. Faster Access to Insurance Coverage

While you’re entitled to 60 days to decide between COBRA, coverage doesn’t begin the minute you submit your paperwork. Generally, individuals can expect a processing time of three to four weeks. Not only is it a lengthy process, but you’re also responsible for paying the full initial premium; effectively paying retroactively for coverage from the moment you left your job.

In contrast, health insurance plans for short-term coverage allow you to access coverage much more quickly, sometimes as soon as the next day.

2. More Flexibility & Features

With COBRA, your ability to make changes is limited to dropping coverage. Once you’re discontinued, you’re not able to reinstate COBRA. If you want to change plans, you need to wait until the next open enrollment period.

Short-term health plans offer superior flexibility and features, allowing you to shape your coverage to fit the immediate needs of your family

  • Up to 90 days of coverage
  • Pick your physician
  • One family deductible
  • Customizable deductibles and co-pays

3. Superior Value & Much Cheaper Than A COBRA Plan

There’s no question that COBRA is costly. While it guarantees continuing health insurance after quitting job, getting laid off or retiring, your former employer is no longer subsidizing your monthly premium. Monthly out-of-pocket costs can more than double, leaving you on the hook for a massive payment as well as your deductibles and co-pays.

Short-term medical insurance is generally far less costly than COBRA coverage. You’re able to customize your coverage to fit your budget, selecting between high-value plans, options for catastrophic coverage with an affordable monthly premium and more.

Am I a Good Candidate for the Best Short-Term Medical Insurance Plans?

Making the right decisions on health insurance products can be challenging, especially if you’re facing periods of life transition. While gaps in employer-provided coverage are one of the most common reasons people may consider COBRA, other reasons for eligibility include:

  • Aging out of parent’s coverage
  • Waiting for benefits at a new job
  • Divorce or separation
  • Early retirement

For some individuals who are facing extended gaps in coverage and a need to maintain continuity of care for chronic health conditions, COBRA may be the right choice. However, for most other individuals, purchasing a short-term health plan that offers 30-90 days of coverage offers far more value at a much lower cost. In some states, you can purchase plans consecutively to extend affordable insurance access beyond three months.

Depending on the plan you select, you may be able to access up to $1 million of coverage for:

  • Physician office visits
  • Surgery
  • Hospitalization
  • Home health care
  • Extended care
  • eHealth visits
  • Prescription coverage

Why Flexible Short-Term Coverage Is Likely the Smarter Choice

For hundreds of thousands of individuals who are facing a gap in health insurance, short-term health plans are a better decision than opting for COBRA. With flexible options to fit your health goals, needs, and finances, short-term coverage can provide critical peace of mind during periods of transition.

COBRA Eligibility

Gross Misconduct Does Not Qualify You For COBRA

In the event that your termination reason was due to gross misconduct, the employer does not have to offer insurance continuation.

How Long Does COBRA Last After You Quit?

You may remain on your former employer’s COBRA insurance plan for up to 18 months. Depending on your circumstances you or your qualified dependents may be eligible for up to 36 months of continuing coverage.

When Can I Apply For COBRA Coverage?

Your former employer has up 45 days to send your COBRA continuing coverage election paperwork. This packet of information will give you the cost of your COBRA plan, how to enroll and where to make your premium payments. The law requires your former employer to give you a 60 day open enrollment period to choose to continue your current employer health plan or waive COBRA coverage.

More details on COBRA and how it works.

When Does Coverage Begin?

Your COBRA insurance will start immediately after making your first premium payment. Once you elect to continue the employer group health plan, your benefits will be retroactive to the date your coverage would otherwise have stopped. If you have out-of-pocket expenses between the time the coverage stopped and then started, you may be reimbursed by your carrier.

COBRA Third-Party Administrators

Your COBRA plan may be managed by a third-party administrator. Many employers work with the following:

If you are unsure who your plan administrator is, reach out to the human resources department of the company that provided the health insurance you had.

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