From Insurance for Dummies by Jack Hungelmann

 All right, enough with the boring details on COBRA and HIPAA law. How could all this affect you? Here are some possible scenarios.

• You’re 55 years old and took early retirement. Should you elect the COBRA continuation option now for 18 months when you have ten years before you’re eligible for Medicare?
• You’re a 40-year-old homemaker with two children at home. You’re covered by your husband’s group health policy when he dies suddenly of a heart attack. The life insurance is sufficient to allow you to stay home with the kids for at least five more years. Should you take the 36-month COBRA option?
• You’re age 65, retiring and starting Medicare. Your 55-year-old spouse, who has a home-based business, has been covered by your group health insurance policy. Should she take the three-year COBRA option that will cover her only to age 58?
• You’re 36 years old and have been just laid off. You’ve decided to use the nice severance package to become self-employed. You have 29 years to retirement. Should you exercise your 18-month COBRA option?

A few general guidelines to help you with your COBRA decisions

• Don’t go even a day without major medical insurance. (Remember the rule: Don’t risk more than you can afford to lose.)
• Don’t use temporary health insurance when you’re between jobs, if you qualify for COBRA. Always exercise your COBRA continuation option instead. Yes, it’s more costly. But unlike temporary health insurance policies, it covers preexisting conditions.
• Do exercise your COBRA continuation options anytime your maximum possible need for coverage won’t exceed the maximum period of your COBRA option. The COBRA option is seamless, and it allows you to continue using the same doctors in the transition period.
• If the maximum possible need for coverage exceeds the length of your COBRA options:
• Do continue COBRA for the short term while applying for individual health insurance coverage. Then drop the COBRA option when the individual health insurance policy is approved and all preexisting conditions are fully covered.