Understanding COBRA vs. short-term health insurance can seem complicated at first. But taking a closer look at what both plans offer with your needs in mind can point you in the right direction.
What Is COBRA?
The Consolidated Omnibus Budget Reconciliation Act — COBRA for short — isn’t actually its own form of coverage. Instead, it’s a law that allows you to continue the employer-sponsored health insurance that you would otherwise lose when you leave your job (voluntarily or not). It’s important to note that you’ll pay the full monthly premium, not just the portion you paid as an employee. This can be pricey, but it’s probably worth maintaining a full range of health benefits if you have any ongoing or expected future medical care needs. Typically, you can keep your COBRA coverage for up to 18 months. COBRA can also apply in divorce situations where your spouse’s employer provided you both coverage, or to extend your coverage under a parent’s insurance when you turn 26.
What Is a Short-Term Plan?
A short-term health insurance plan is a stand-alone product that provides coverage for a limited period of time — as of October 2, 2018, up to 364 days of coverage in most states. Because they generally offer less comprehensive coverage than Affordable Care Act (ACA) plans like the one probably offered by your employer, they tend to be much less expensive. If you expect few medical expenses, short-term plans can cover basic needs until you have access to a fuller suite of health insurance benefits.
Which Option Is Right for Me?
Though they may be triggered by similar events, like job loss or divorce, the right option for you depends on the specifics of your situation. When deciding between COBRA vs. short-term health insurance, consider what you need to have covered: If you have complex medical needs, the best option might be to stay with your employer’s health insurance plan through COBRA. If you’re relatively healthy with limited medical costs, a lighter short-term plan may be just what you need to bridge the insurance gap.