Ten Questions to Ask When Considering COBRA Following a Disability

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Allsup explains the pros, cons of purchasing COBRA to cover healthcare costs following a long-term disabling event, especially during the wait for Social Security Disability Insurance benefits

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There are time limits for choosing coverage, and COBRA can be a significant resource for someone who is applying for SSDI and continues to have healthcare costs.

Experiencing a long-term disabling injury or illness triggers a number of issues for adults who must stop working because of a disability, according to Allsup, which represents people nationwide for Social Security Disability Insurance benefits (SSDI). One of the biggest decisions is whether to continue healthcare coverage through COBRA. It's not an easy choice to make.

"There is no one-size-fits all answer to whether getting COBRA coverage is the best choice. But it's very important to make sure this option doesn't get away without some consideration," said Paul Gada, a tax attorney and personal financial planning director for Allsup. "There are time limits for choosing coverage, and COBRA can be a significant resource for someone who is applying for SSDI and continues to have healthcare costs."

Federal law requires employers with 20 or more employees to provide COBRA healthcare continuation coverage. This means that someone electing this option will continue to receive coverage under his or her former employer's group health plan for a limited time.

"Initially, this may seem like an obvious choice -- yes, of course, you want to continue to have the health coverage you had while employed," Mr. Gada said. "However, there is a cost -- and it can be at a premium."

Ten Questions to Consider With COBRA

To help clarify the healthcare choice for people with disabilities, Allsup offers the following 10 questions to consider when getting COBRA or continuing COBRA coverage:

1.    Are you eligible? To be eligible, you must have been enrolled in your employer's health plan when you worked and the health plan must continue to be in effect for active employees. If you are eligible for COBRA, you should get a detailed notice with coverage and application details from your former employer's benefits administrator or the group health plan.

2.    Do you have dependents? If your healthcare coverage provides benefits for family members in addition to yourself, then there is an added advantage to continuing this coverage. An alternative may be to consider the healthcare coverage offered through a spouse's employer, if available.

3.    Are you applying for Social Security disability benefits? COBRA generally allows you and your dependents to keep the group health plan coverage for 18 months after your employment ends. There is an additional 11-month extension available when a qualified beneficiary is determined by the Social Security Administration (SSA) to be disabled. This would provide 29 months of healthcare coverage.

4.    Have you been awarded Social Security disability benefits? Once awarded SSDI, you can extend your COBRA coverage an additional 11 months. This ability to extend benefits may be significant during your waiting period for Medicare health coverage to begin. Individuals who are awarded SSDI automatically become eligible for Medicare 24 months from the SSA-determined date of award.

5.    Have you been awarded SSDI and do you have dependents? If one of the qualified beneficiaries in a family is disabled and meets SSDI eligibility requirements, all of the qualified beneficiaries in that family are entitled to an 11-month extension of the general 18-month COBRA coverage period. This then would provide a total COBRA coverage period of 29 months.

6.    What will your COBRA coverage cost? When you assume the cost of your insurance premium through COBRA, you may find the monthly premiums to be surprisingly high. This is because you typically pay both your former employer's portion plus your portion of the premium. For the first 18 months, the premium for continuing health insurance coverage costs up to 102 percent of the cost to the plan for those still employed.

7.    What will your medical costs be? Knowing the cost of COBRA is most valuable when you can compare it to the estimated healthcare costs you will have during the coming months. Take into account the number of required doctors' visits. What will those cost without insurance? Look at your deductibles; estimate your future medication costs, possible diagnostic testing and hospitalization. Keep in mind, COBRA continues the healthcare coverage you had -- if you had co-pays, you still have co-pays. Is there a chance that your disability may require emergency treatment or unexpected costs? These figures can help you with the number crunching.

8.    Do you know that your COBRA premiums may increase? For those receiving the 11-month disability extension, the premium for these additional months may go up to 150 percent of the plan's total cost of coverage.

9.    Have you priced any individual health plans? Though group health coverage for COBRA participants usually is more expensive than health coverage for active employees, it still is less expensive, generally, than purchasing individual health coverage from a non-employer source.

10.    Have you considered your future medical needs? COBRA coverage allows you to continue your previous health insurance and cover your increasing medical needs. Also, by continuing coverage you won't have to fear having something not covered because of a pre-existing condition.

Making The Choice

Trying to decide whether COBRA coverage is best for you is not easy. Like most things, the choice comes down to weighing the costs versus the benefits of having the coverage. "Ultimately, it comes down to the pocketbook," said Mr. Gada.

"Take the time to consider your options carefully and don't feel pressured to make a decision right away. You have at least 60 days to make a COBRA election," he said.

The clock starts ticking from the date that coverage under the employer's plan was lost or when the COBRA election notice is sent by the employer or plan administrator, whichever is later.

"Provided you don't waive your right to coverage, you can sign up for COBRA on the last day that you are eligible and still have your coverage be retroactive to the date you lost your job -- provided you pay all the associated retroactive premiums," Mr. Gada said.

If your insurance costs outweigh the medical benefits received, or if you just don't have the money to pay for premiums, consider exploring some low-cost healthcare options such as drug company and state pharmaceutical assistance programs. There also are various government programs (such as Medicaid, Veteran's Assistance benefits, and state and local health services) that provide health insurance coverage to people who can't afford to buy it themselves.

"You have to decide: What can I afford to buy?" Mr. Gada said. "But realize there is a flipside. What can you afford to pay -- financially, mentally and otherwise -- if you go without healthcare coverage while trying to deal with your disabling condition."

To learn more about other potential healthcare coverage options, Allsup provides a section on Medicare.

Allsup, Belleville, Ill., is a leading nationwide provider of financial and healthcare related services to people with disabilities. Founded in 1984, Allsup has helped more than 100,000 people receive their entitled Social Security Disability Insurance and Medicare benefits. Allsup employs more than 500 professionals who deliver services directly to consumers and their families, or through their employers and long-term disability insurance carriers.

For more information, visit http://www.Allsup.com .


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Rebecca Ray
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Dan Allsup
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