COBRA

COBRA, the Consolidated Omnibus Budget Reconciliation Act of 1985, allows you to continue your health insurance in situations where coverage may have been lost due to certain qualifying events, i.e. the loss of employment (unless due to gross misconduct), divorce, death of a spouse or because a dependent child has reached the age of attainment. You are guaranteed the right to continue your existing group coverage provided that:

  • Your employer has more than 20 employees.
  • You were covered under the existing health plan.
  • You have one of the qualifying events.
  • You are able to pay the full cost of the premium yourself.

Costs

COBRA coverage is expensive since your employer will no longer be contributing toward the cost of your health insurance. Be prepared to pay 102% of the cost of the plan. The extra 2% is for administration fees. If you extend your COBRA coverage because of a disability, your premium will increase to 150% of cost.

 

Why Enroll in COBRA

 Here are two very important reasons why, in spite of the cost, you may want to consider Cobra as a way to bridge the gap until you have other coverage: 

1.      The cost to treat even a minor illness or injury is very expensive, it is important that you always have some type of health insurance that can help offset the cost of needed care.

2.      In order not to be subject to a preexisting period, one must not lose coverage for more than 63 days. COBRA allows you to bridge the period from when you lose coverage to when you enroll in a new plan.    

Qualifying Events

  • Termination of job or reduction in hours would entitle you and your eligible dependents to COBRA coverage for 18 months.
  • Divorce, legal separation, death of the employee or if you are covered under Medicare would entitle your spouse and eligible dependents up to 36 months in COBRA coverage.
  • Loss of dependent child status would entitle the child up to 36 months of COBRA coverage.
  • Persons on disability and eligible for SSI would be entitled to COBRA coverage for up to 29 months.  

Enrollment Time Line

  • Your employer has 30 days to notify the plan holder of a qualifying event.
  • The plan holder has 14 days to get your COBRA information and enrollment materials out to you.
  • You or your dependents have 60 days to elect COBRA. 
  • You have 45 days to pay the first premium.

When Will Coverage Terminate

  • When you stop paying the premiums.
  • If you move out of the coverage area.
  • Your coverage period has run out.
  • You become covered under another group plan. 
  • You become eligible for Medicare.

General Facts about COBRA

  • Cobra is not available for individual plans; it applies to group plans only.
  • Self-funded plans must also offer COBRA coverage.
  • COBRA does not extend your life insurance.
  • The employer, nor the insurance carrier, is required to send you monthly premium statements. It is up to you to get the correct cost of your premium in on time.
  • If the employer is hit with a rate increase, your premiums can increase as well. 
  • Your COBRA coverage must be identical to the coverage you had before.

You are allowed to drop incidental coverages like vision or dental plans.


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