How to Use Cobra Insurance

Doctor's office check up.
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If you lost your job or left your employer for a new position, you may have a period when you don’t have health insurance coverage. COBRA insurance coverage was enacted to provide people with a continuation of their existing health insurance to bridge the gap until their new, permanent coverage becomes effective.

If you find yourself in a situation that requires you to use COBRA, take care to handle the situation to your best advantage. COBRA can be expensive, but health insurance is something that you should keep even when you live on a bare-bones budget

Wait to Verify That You Need COBRA Insurance

If you have just started a new job, you may experience a lapse in coverage. Because of the high cost of COBRA insurance, you may decide to play the COBRA waiting game.

The insurance company allows you to make your initial COBRA insurance payment within sixty days of your insurance coverage ending. Carefully consider all of your options before you decide to wait on sending in the premium.

  • If you are healthy and would not have any preexisting conditions on your insurance, you may choose to wait to make the payment unless you have an emergency. That way if you don’t need to use COBRA insurance for the short period you're not otherwise insured, you do not have to spend the money on it.
  • It won't likely make sense if you have preexisting conditions, since you may save money by having continuous insurance coverage. However, your fines for not having health insurance will be prorated, so you pay fines only for the months that you do not have coverage. It may be less than you would pay for COBRA coverage for a month or two until your new policy kicks in. 

    Alternative Health Insurance Options

    If you have lost your job or you have a new job with little or no health insurance, you may choose to continue to use your COBRA insurance coverage.

    You can use COBRA for up to eighteen months. However, since the cost of COBRA coverage is usually much more than other options, you'd be better off shopping around, comparing rates and plans, and finding an alternative to COBRA health insurance

    You may be able to pick up a policy at much less independently, especially if you are single. You may also qualify to sign up for health insurance through your state's health insurance marketplace (also known as the health insurance exchange) right away if you lost your job.

    Check the exchanges to see if you can find more affordable insurance. Shopping around for your health insurance can result in significant savings, but if you have medical conditions, the best option may be your COBRA coverage.

    If you are married, consider getting insurance coverage through your spouse's employer. Losing coverage due to a job loss allows you to enroll even if it is not open enrollment. Some companies also offer health insurance coverage to domestic partners. If you are in a serious relationship, you may consider this option too. 

    Paying for Your COBRA Insurance Premium

    You may pay your COBRA insurance directly to your insurance company, or you may pay it to a COBRA administrative company. You should watch for the letter explaining the cost of the premium, which will be your previous cost plus the amount your employer paid as well, and where to send the payment. You will likely be issued a new insurance card as well.

    Be sure that you continue to make insurance payments as long as you need the insurance. If you cancel the insurance early, you will need to write a letter and contact the company to cancel the insurance, as simply stopping payment will not cancel the policy. You may end up owing the company money for past premiums if you do not officially cancel the policy.

    Keep the Certification of Coverage for Your Records

    If you opt out of the COBRA option, you will receive a letter from your insurance company stating the dates that you were covered under them. It may reduce the waiting period for your new insurance. If you know far enough in advance, you may be able to set up a high deductible policy to cover the period of time between insurances. It would help to eliminate a preexisting condition policy on your insurance.


    1. The Affordable Care Act means that if you lose insurance coverage, you could face serious financial consequences. There are definite ways that the Affordable Care Act affects people in their twenties. You can take advantage of the different types of insurance that the act offers. Take time to choose the right option and to keep your health insurance. If you do not have health insurance, you can face fines and penalties.
    2. Another option may be short-term health insurance. This insurance coverage does not qualify under the Affordable Care Act. However, it does protect you from catastrophic medical bills. You may want to consider this if you are really tight on money and the idea of no insurance coverage scares you. 
    1. The rules around health insurance might change again. Regardless of the existing laws, it is important to have health insurance. It protects you from the worst-case scenarios like a serious accident. A health emergency like appendicitis can make it difficult to recover financially, and something more serious like cancer can limit your treatment options and be devastating financially without health insurance coverage. At the very least, get a high deductible health insurance plan to cover those instances, and set up an ​emergency savings fund to cover the high deductible.