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In normal times, COBRA coverage presents challenges for those people who are eligible for Medicare[1].

Throw in COVID-19 and your clients face perilous decisions about their health care.

There has been an accelerated pace of people having to decide if they should take COBRA, go to Medicare, do nothing or do something. Workers are being offered early retirements. Some are accelerating their own timeline of retirement, if they can. Many are facing unemployment at an historical pace.

Decisions about healthcare coverage often have to be made quickly and at times of duress. Mistakes can easily be made.

Let’s talk through what COBRA is and I’ll tell you what I mean by “mistakes.”

COBRA stands for Consolidated Omnibus Budget Reconciliation Act. In 1983, this federal law was passed to provide for continuing group-health insurance as coverage for some employees and their dependents after a job loss or another qualifying event. COBRA is the insurance that someone had at work and were used to having while employed. Thus, in the employee’s head, “it’s just regular insurance like I had at work.” They intend to take that coverage “with them” as they separate from the employer.

Because this coverage looks and feels like their “normal” coverage, in comes the potential for mistakes.

I find that COBRA paperwork is often provided to a person who is over age 65 with no disclaimers or even the suggestion of “Please talk to a person about Medicare and how it can affect COBRA coverage.” Not to pin anything on human resource departments, but the typical statement I hear from the employee leaving the employer is that, “HR said it’s the same coverage that I had.”

Yes, it is indeed. The company will allow you take that exact same coverage with you for typically up to 18 months. Often, you (the employee) will pay 102% of the cost. You’re buying the same coverage that you had at work.