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Counting on COBRA? Check the rules

COBRA, the federally mandated health insurance plan that is supposed to help bridge the coverage gap between jobs, may not provide much protection if your new job takes you to a new area.

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The Consolidated Omnibus Budget Reconciliation Act, known as COBRA, guarantees you the right to continue the medical insurance you had when your coverage stopped because of various circumstances, primarily quitting or losing your job. The law also covers situations like death or divorce.

It's not free or even cheap. Your premiums will be 102 percent of your old employer's cost for the same health insurance.

And there's a big glitch to the COBRA-will-catch-you-if-you-fall strategy. It might not help if you move out of the coverage area.

"Generally under COBRA, you have the right to continue exactly what you have," says Paul Hamburger, head of employee benefits practice in the Washington, D.C., office of international law firm McDermott, Will and Emery and a specialist in COBRA law since before it was called COBRA.

So if you're relocating from Iowa to New York and hope your COBRA coverage will tide you over until you're settled in your new life, keep this in mind -- your old insurance provider might not provide much coverage in your new home.

"You only get to keep what you had immediately before the qualifying event, even if it's no longer valuable to you," says Hamburger, who is also the author and editor of "Mandating Health Benefits -- The COBRA Guide."

The "qualifying event" is what made you eligible for COBRA.

According to the act, even if your insurance won't cover a thing in your new state, it still may be all you're entitled to.

Determining how far your network stretches is relatively easy, and it's a good thing to do before you sign up to continue with it under COBRA, says Steve Fulton, a benefit consultant with FlexMagic in Glenwood Springs, Colo.

"One thing to keep in mind is: Are you moving to an area where you're using in-network doctors?" Fulton says. "If you're moving across the state line, will you still be in the network?

"You really want to make sure the doctors in your new area accept your plan. You could go online to the insurer's site, punch in your new ZIP code and see what's available in your area."

Under many plans, your old insurer in Iowa can insist that you go back to Iowa the next time you have a sore throat if you want that throat exam covered. Otherwise, you're stuck paying out-of-network fees, which can be astronomically high.

Some online research will probably turn up some very basic emergency coverage if you move out of state.

Most plans have some provision for people who are traveling through South Dakota, for example, when they break a leg. See how far that out-of-area provision stretches, and ask about emergency-room coverage before you sign up to pay often pricey COBRA premiums.

Inform yourself, protect yourself
An informed consumer has a much better chance of getting the most out of COBRA.

 
 
Next: "Get the insurance plan summary from your old employer."
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