When I resigned my job a few years ago, I met with my HR rep at my office to go over a few things before my final day. One of the topics we covered was COBRA Insurance, or COBRA continuation coverage. COBRA stands for Consolidated Omnibus Budget Reconciliation Act of 1985, and is a federal law which helps employees maintain health care coverage when they would otherwise lose it from a “qualifying life event,” including resigning from a job or filing for unemployment.
Health insurance is one of the most important safety nets that you can have for you and your family. You never know when there is going to be an accident, and that accident could lead to thousands and thousands of dollars of medical bills and other expenses. If you didn’t have health insurance, or the right type of coverage, you and your family could be responsible for a massive amount of bills.
This article is going to explore the different areas of COBRA insurance and how you can use COBRA to your advantage. Hopefully, this article is going to answer any of the questions that you have.
What is COBRA Insurance?
Basically, COBRA health insurance coverage guarantees employees the right to keep their group health care coverage for up to 18 months when they would otherwise lose it after leaving their job. COBRA generally covers employees who resign or are terminated for any reason other than “gross misconduct.”
However, there is one big difference. While employees are guaranteed the right to the same health care coverage they previously had, they are required to pay for all of it out of their own pocket. Their former employer is not required to subsidize the payments. Employers often cover a substantial portion of health insurance premiums, so COBRA coverage can be expensive.
COBRA Coverage can also be made available to an employee’s family members, sometimes for up to 36 months. COBRA is not available for individual health care plans that are purchased outside of a group plan through an employer or an association. If you lose individual health care coverage, there are no COBRA laws that require an extension. There are also similar plans covering health care after leaving the military.
If you find yourself suddenly out of a job, losing health insurance coverage is going to make the situation a thousand times worse, especially if something were to happen to you or one of your family members. COBRA is a perfect way for any employee to continue to have insurance protection if they were to quit or lose their job. It’s there to ensure that you aren’t left without proper insurance protection. COBRA is a unique plan with a lot of different aspects that you should be aware of if you’re looking to take advantage of the plan.
How is COBRA Coverage Provided?
You must contact your human resources department and inform them when you have a qualifying life event, generally within 30 or 60 days of the event, depending on the type of event. Once your HR department has been made aware of the life event, they are required to offer qualified beneficiaries COBRA coverage. Each qualified beneficiary has the independent right to elect or decline coverage. From there, payments will be arranged through your company or their group health care provider.
If you’re eligible for COBRA coverage, your health plan will give you a notice that shows you have a right to continue your coverage. As soon as you decide to continue your coverage under COBRA, you’ll then be responsible for paying for your insurance coverage.
When does COBRA Coverage end?
COBRA Coverage can extend up to 18 months for the employee, and up to 36 months under certain conditions for a spouse or dependents. There are certain conditions that will cause COBRA coverage to end, including:
- Reaching the last day of COBRA coverage (after 18-36 months)
- The employer ceases to offer a group health care plan
- The employer goes out of business
- The beneficiary obtains coverage elsewhere
- The beneficiary doesn’t pay the premiums
- The beneficiary is entitled to receive Medicare benefits
It’s important that you understand all of the circumstances that could cause you to lose coverage through COBRA. The reasons above are only some of the broad reasons that you could lose your health insurance plan protection, and not having health insurance is one of the worst things that you can do to your family and loved ones.
What Does COBRA Cover?
There are several broad categories that COBRA enrollees will be covered for. There is nothing that you can do about the rising cost of healthcare, but there are some ways that you can offset that bills to protect yourself from paying for massive bills.
COBRA coverage will help pay for both inpatient and outpatient hospital care, as well as physician care. It will also pay for any surgery or other major medical benefits that you could face depending on your health. Beneficiaries will also enjoy coverage from prescription drugs. Every year the price of medications is going higher and higher, and it’s important that you have the prescriptions that you need, without having to foot the bill yourself.
One of the requirements of COBRA coverage is that it must provide identical protection that the beneficiary was receiving before they enrolled in COBRA. If you were receiving vision and dental on the group coverage when you were employed, then you’ll still have that same coverage when you’re utilizing the COBRA rule. Because vision and dental are not considered “core benefits,” then you can elect to eliminate those from your coverage and lower your premiums.
Alternatives to COBRA
If you decide what you don’t want to participate in COBRA, for whatever reason, there are some other options that you have that you can use to get health insurance.
One obvious choice is to enroll in a government health insurance place. There are plenty of options under the Affordable Care Act, which will give you affordable health insurance protection. These plans have different requirements and coverages that you’ll need to compare when you’re looking to get the perfect plan for you and your dependents. There are several different levels of coverage, some of them offer more insurance protection than other levels.
Another option is to get health insurance through your spouse’s insurance plan. If your spouse has the option to get coverage through their workplace, then you can add that coverage for you and your spouse, which will tend to be a cheaper option than getting a private plan without employer assistance.
One thing that you should always avoid is skipping health insurance coverage altogether. It’s extremely risky and that could have dire consequences. Even if you don’t want to pay the premiums for the quality coverage that you had from your employer, you should still consider purchasing a plan that will protect you with catastrophic coverage.
Should you elect for COBRA Coverage?
This is a very personal decision. While COBRA can be very expensive (sometimes prohibitively expensive), it will allow you to keep the same group health care coverage as you had while you were with your employer. COBRA also extends to spouses and dependents in events such as a divorce or the death of an employed spouse. This may be their only way to maintain coverage.
In my opinion, health care insurance is essential. I would at least consider COBRA coverage until you can investigate other options. Before applying for COBRA coverage, you should at least investigate individual health insurance, which will probably be a cheaper option (though you may not be eligible if you have a preexisting condition). You can find search for health insurance at eHealthInsurance.com for multiple rate quotes.
When you’re shopping for health insurance coverage, it can be a long and difficult search. There are dozens and dozens of different factors to consider to ensure that you’re getting the best plan. Because of the world that we live in, you never know what’s going to happen to your job or your health insurance protection.
If you have any questions about health insurance or about COBRA coverage, please contact me today. I would be happy to answer those questions and ensure that you’re getting the perfect coverage for both you and your family. If you’ve lost your job for whatever reason, don’t assume that you have to go without health insurance protection.
Disclaimer: This article is intended to serve as a primer for COBRA coverage. There are many situations that can affect an individual’s eligibility. Please consult with your HR department or another professional for more detailed information. You can also visit the Department of Labor website for specific questions, or for information about the regional office in your area. You may also call 866-444-ebsa for publications or to be directed to the office in your area.