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COBRA insurance loophole

September 25th, 2007 at 05:30 am

Interesting article that includes info on how to save money on COBRA health insurance after you leave a job:

www.charlotte.com/business/moneywise/story/289408.html

"But here's what a lot of people don't know: You don't need to sign up for or buy COBRA coverage as soon as you bid adieu to your old workplace. That's because you have 60 days to elect COBRA coverage and another 45 days after that to buy it. In other words, you don't have to pay for any insurance for 105 days -- and if you don't get sick or need to see a doctor or go to the hospital, you pay nothing at all.

Here's what you do: You sign up for COBRA on the 60th day after leaving your job. Then, if you need to use the health insurance within the next 45 days you pay for coverage. Claims are retroactive to the first day in which you were no longer covered through work."

3 Responses to “COBRA insurance loophole”

  1. fern Says:

    If i were considering doing this, i would definitely seek to confirm that this loophole is indeed the case.

    Health insurance is just too costly to take a chance with, and if you happen to have a pre-existing condition, you DON't want to take a chance of letting your coverage lapse, becus then any carrier can reject you, or make the cost of such coverage astronomical.

    I've had a pre-existing condition for about 20 years now. 80% of that time my health has been fine, but for the last 7 years, i've been on a prescription drug to manage my condition. If i had to pay for that drug out of pocket, it would cost me $1200 a month. With insurance, I pay $25 a month. For someone like me, it wouldn't be worth it to fool around with COBRA loopholes just to save a month's worth of premiums.

    We are all just a job loss away from a possible catastrophic event. If you're young, it's easy to dismiss this but not a smart thing to do IMO.

  2. LdyFaile Says:

    I agree with Fern. I have a pre-existing condition and this is my last week at my current job. We pay ahead for the next month so I'm covered for October but I have meds that I buy monthly and it will be a total of 120 days between when I leave my old job and when I am covered at my new job. In Oregon you can only have 63 days of no insurance, even with 30 days covered that still leaves 90 days. I'm not going to chance it and will pay for COBRA for 2 months. If I didn't have my pre-existing condition, I would totally look into that potential loophole.

  3. Will Says:

    What is not mentioned here is that once you decide to pay for COBRA, the cost is retroactive. Too risky.

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