Everyone needs health insurance, but sorting through the many complex choices can be maddening. Here’s a guide to the pros and cons of the most common options:

THROUGH AN EMPLOYER

Choose a plan offered by your employer

If your employer offers health insurance, you'll usually be given a choice of at least two options, typically including a health maintenance organization (HMO) and a preferred provider organization (PPO).

Cost: Most employers pay either all of the monthly premium or a large percentage.  

Pros:

  • Employer-provided insurance is usually the most affordable coverage you can get – and often offers the best coverage.
  • A health exam isn't required; that's especially important if you have a pre-existing condition.

Cons:

  • Some small businesses offer incomplete coverage or require employees to pay a high percentage of the cost.
  • Not all employers offer health insurance.

How to get started:
Your employer will likely give you all the details about your health insurance options within your first few days of employment.

Tip: Before you decide which plan to accept, talk to several colleagues and find out what they like and don't like about their current plan.

Sign up for COBRA Coverage

If you quit or lose your job, have your work hours reduced, lose your spouse’s coverage due to death or divorce, or lose coverage because of some other so-called qualifying event, the Consolidated Omnibus Budget Reconciliation Act (COBRA) allows you to take over the premiums once paid by the employer.

Cost: Employers generally can’t charge more than 102 percent of their cost (more in some rare cases) – the extra 2 percent is to cover administrative costs – but it can still feel like sticker shock after paying little or nothing for an employer-offered policy.

Pros:

  • COBRA coverage is essentially just a continuation of your old plan, with all the same advantages: same deductibles, same coverage, and no exclusions for pre-existing conditions.
  • Even though it’s expensive, COBRA coverage usually costs less than you’d pay for a comparable individual or family policy.

Cons:

  • Not all companies or organizations are required to offer COBRA coverage; companies with fewer than 20 employees, most federal government employers and many church-related organizations are exempt.
  • COBRA coverage lasts only for 18 months – or up to 36 months if you have a disability or you’ll be eligible for Medicare within that time.

How to get started:
You should receive a letter from your employer or your employer's agent within a few weeks of either the job termination or other qualifying event, giving you details on the cost of coverage and exactly what to do. You can also try these resources:
• If you work for a private sector employer, call the U.S. Department of Labor at (866) 444-3272 or visit its COBRA website
• If you work for a state or local government, call the Centers for Medicare & Medicaid Services at (410) 786-1565.
• If you work for the federal government, you’re not covered by COBRA. Instead you’re covered by a similar plan and should contact your agency’s human resources or personnel office.

Tip: California Residents are eligible for extended COBRA benefits, including coverage that lasts up to 36 months, under Cal-COBRA.