The Consolidated Omnibus Budget Reconciliation Act, also known as COBRA, requires employers to continue to provide health or medical insurance coverage to employees or their families after certain qualifying events. This limited extension of coverage may allow time for transfer to a new health care plan.
What is COBRA?
If you leave your job voluntarily or are fired for reasons other than gross misconduct, you can extend your coverage for up to 18 months, and an additional 11 months if you are disabled.
This also applies if your working hours are reduced to the point where you are no longer eligible for health insurance coverage from your employer. Your spouse or children can extend coverage for an additional 18 months if there is a second qualifying event, such as your retirement, divorce, or death.
There are other COBRA qualifications and stipulations for employers. For example, COBRA only applies to employers with 20 or more employees. They may be private-sector employers, employee organizations, or state or local government employers. More information about employer qualifications and rules can be found on the US Department of Labor’s COBRA website.
In some states, there is state-based coverage for employees who work for small businesses and do not have access to COBRA.
How to Apply for COBRA Coverage
When you’re ready to leave your job, your employer must provide you with COBRA information that will include the steps you’ll need to take to extend your coverage after you leave work.
If you have not received this information within 14 days, contact your employer’s human resources department and ask them to provide it to you.
You have 60 days to decide whether or not to continue your coverage with COBRA. This will give you time to see what other coverage may be available. You won’t have gaps in your old plan’s coverage as long as you make a day 59 decision.
You are responsible for your applicable COBRA premiums during this time. Your COBRA coverage will be backdated to cover any medical expenses you incurred during that time.
Make sure you don’t go over the 60 day period without applying for another health care plan. You may need to fill the gap with short-term health insurance if you wait for a new employer’s health insurance to kick in. Medicaid may also be an option for you.
Your coverage under COBRA
If you take advantage of COBRA, the coverage plan you will have is the one you had at the time of the event that triggered your loss of employer health care. The plan itself will not change unless you choose a new plan at the time of the open enrollment period.
With the same health insurance as before, you will not have to change doctors and you will have the same coinsurance, the same deductible, and the same co-payments that you are used to paying.
Cost of COBRA Coverage
Employers are allowed to charge you, their former employee, 102 percent of their cost of insurance. Of course, 100% covers the cost of the employer to ensure you. The 2 percent surcharge covers any administrative costs that the employer must absorb to take care of the paperwork.
Another difficulty is that if you receive the additional 11-month disability insurance extension, your premium for those additional months may be increased to 150% of the total cost of plan coverage.
Employees are often shocked at what COBRA coverage will cost them. Often your premium while employed was only a portion of the total cost of your health insurance plan while your employer pays a percentage or even the full cost. Now you will bear the entire cost.
Unfortunately, as expensive as COBRA coverage may seem, it will likely cost you even less than individual health insurance. Compare costs and coverage to make sure it’s the best choice.
You may have a lower-cost option in the individual health care market.
Exactly how do I apply for Cobra coverage?
Once you have been terminated, your company must provide you with details on how you can obtain COBRA protection.
Specific COBRA rules?
First, COBRA insurance coverage also extends to the worker’s family. In addition to this, a worker can choose to continue with COBRA or choose not to from the time they lose their job – they cannot use this protection periodically (i.e. start COBRA three months after losing his task – in this situation, he will certainly pay retroactively for these 3 months).
How long can I buy COBRA insurance after I lose my job?
COBRA insurance coverage can only last for a minimum amount of time, usually around 18 months. This should give enough time to get another source of health insurance. With any luck already, the recession will be more than too much, and the number of people used would be increasing.
What are the benefits of Cobra?
The benefit of COBRA is that it protects an ex-employee from having to get brand new medical insurance – at least for a while. The problem is that getting such insurance coverage can prevent a person from getting treatment for pre-existing conditions. For example, a pregnant woman who drops out and drops her insurance will find it difficult to get new insurance coverage. Thanks to COBRA, however, this is no longer an issue, as she can simply continue her existing insurance coverage.
Note that according to the employer, although employees are qualified to continue their previous health, dental and vision coverage, the company no longer needs to fund this. This successfully indicates that the ex-employee is paying the full cost of their wellness coverage, which will be much higher than before.
Directly, I had been using the COBRA system for some time, and as for me, too, I have in mind that I have paid about four times as much as I have paid in the past, as well as this will limit insurance coverage to just me. It really drives home what a huge benefit medical insurance is, as well as how much companies spend on employee wellness coverage.
COBRA health insurance and also the recovery plan
Through the Financial Stimulus Program (which began on February 17, 2009), specific people who quit their jobs are qualified to get a deposit for their COBRA bonus. We will certainly review qualification standards in the next write-up of this collection.