By Amy Baldwin
McClatchy Newspapers

Baldwin

In a recent column, I reported on how 19 million 20- and 30-somethings don't have health insurance and offered tips on shopping for it.

I also wrote about a loophole in COBRA, the federal law that allows workers to buy their employer's health plan after they quit or are laid off. COBRA also lets dependents covered by a spouse or parent buy that insurance after they lose coverage -- i.e. because their spouse dies or they divorce or, in the case of a child, they graduate from college and age out of mom or dad's policy.

The COBRA part of the column generated a lot of response from readers, enough to merit a follow-up.

First, to recap COBRA and the "loophole."

COBRA coverage is pricey. You pay your share and what had been your employer's share. The average combined monthly premium for a single person is $375 and for a family is $977, according to a recent Department of Labor survey.

You can't buy COBRA coverage indefinitely. If you quit your job or were laid off, you can buy it for 18 months. You can get up to 11 months more if you are deemed disabled by the Social Security Administration. If you're a dependent, you can take COBRA for 36 months.

Now, the loophole: You don't necessarily need to sign up or pay for COBRA coverage as soon as you leave your old workplace or are no longer insured. You have 60 days to elect COBRA coverage and another 45 days after that to purchase it. That means you don't have to pay any premiums for 105 days. If you get sick or have a medical emergency, you can sign up and have retroactive insurance back to the first day you no longer had it. If you don't need medical attention, you pay nothing. This is how some people "float" COBRA.

Readers asked what happens if you need to see a doctor before you elect COBRA. Do you have to wait until you have paid for coverage?

The answer: Nope. You might have to pay a doctor's bill out of pocket and get reimbursed later. Again, you are covered back to that first day when you lost that employer-sponsored insurance, so long as you elect to take COBRA within 60 days and pay for it in the next 45 days.

A couple of readers thought I should point out the potential downsides of taking advantage of the COBRA loophole.

For starters, what if you fail to elect or pay for COBRA in time and get sick or in an accident and can't? Well, you're not insured and could end up paying thousands of dollars in medical bills. It's a particular concern for a single person who doesn't have a spouse who can act on their behalf, said Sam Froedge, president of Plan Design Services Inc., a benefits consulting firm in Charlotte, N.C.

Froedge, whose firm advises small and mid-sized employers, also noted that if you need medical attention near the end of that 105-day period you will be on the hook for basically four months of premiums. He wrote in an e-mail: "Can they afford that?"

My advice is to try to build up some savings in case you need to pay for your health insurance. It never hurts to add to your emergency funds. At the same time, don't rush to pick up COBRA. If all you need is a couple of office visits you're better off paying out-of-pocket.

Froedge and another e-mailer pointed out another downside: pre-existing conditions.

Under federal law, if you go more than 63 days without insurance coverage, not including the waiting period at your new employer, your pre-existing conditions might not be covered on your new policy. A pre-existing condition generally is an illness or condition -- other than pregnancy -- that you have been treated for in the past six months, Froedge said. Your new insurer could decide not to pay related claims for 12 months, but would pay bills for new illnesses.

If you have a chronic condition, you should think twice about going that entire 105 days without insurance. You might opt to assume coverage for just one or two months -- assuming you will then be covered through your new employer. You can buy COBRA on a month-by-month basis.

Amy Baldwin covers money-related topics for 20- and 30-somethings in "Out of the Red." Have a question about your personal finances? Contact her at (704) 358-5179 or This e-mail address is being protected from spam bots, you need JavaScript enabled to view it . Leave your name and daytime phone number.