Losing a job is never easy. Losing the health benefits that your job provided to you and your family can be a devastating loss for any family. Since 1986, COBRA laws have provided an opportunity for people who have left their jobs, voluntarily or otherwise (except those fired for gross misconduct), to continue their health insurance coverage while in between jobs.
Overview of COBRA Benefits
You will be responsible for the costs of continuing your insurance coverage through COBRA, and the coverage can extend to your spouse and dependent children. The period you are eligible for coverage will vary according to your situation and is typically between 18 months and 36 months.
When COBRA coverage was introduced, it was the only option available to the many people who needed to continue health insurance coverage between jobs – one that came at a high price as employers were able to charge the full cost of the insurance coverage plus a two percent administrative fee. If you are accustomed to your employer paying some or the bulk of your health insurance premiums, you might be in for a little bit of sticker shock.
Today, people have other options to consider, including special circumstances for Health Insurance Marketplace enrollment. There, you can compare options available to you and costs to see if COBRA is the best option for you – and it may be. Just make sure you are making an apples-to-apples comparison that considers terms like deductibles and coverage limits.
Eligibility for COBRA
Unfortunately, not all workplaces are required to participate in COBRA. For instance, the U.S. Department of Labor only requires employers that have 20 or more employees currently covered by the company health care plan to be required to provide COBRA protection, and you must have been eligible for coverage at the time your employment was terminated.
Additionally, you may be eligible for COBRA benefits if you are the dependent of a COBRA eligible employee who lost coverage because of the death of the covered employee, divorce, or the covered spouse becomes eligible for Medicare.
You do not have to be laid off or quit your job to be eligible for COBRA. In fact, you may be eligible if your hours are cut, rendering you ineligible for the coverage previously provided by your employer.
What COBRA Coverage Involves
COBRA coverage must be identical to the coverage employees receive as part of their benefits packages. For many families, this is perfect as they are already familiar with the COBRA coverages and limitations. For other families, it may be a good time to explore your options and find out what else is available.
Just as with traditional health insurance benefits, children born to covered employees during the continued coverage period are eligible for immediate health insurance coverage upon their birth (as are those adopted by covered parents) though you must add the child to the plan according to the requirements of your health plan.
You can lose coverage through COBRA if any of the following things occur:
- You do not pay your premiums on time.
- Your period of eligibility expires (this is usually between 18 and 36 months).
- Your former employer stops offering group health insurance.
- The eligible beneficiary qualifies for Medicare benefits.
For three decades, COBRA has proven to be a lifesaver for people who lost their jobs and needed health insurance. Some had preexisting conditions that would have rendered them ineligible to qualify for new insurance after a period of having no health insurance. By continuing coverage until new health care coverage began, this became a non-issue for many employees throughout the country.
Today, people have more options available to them. While COBRA coverage continues to provide a lifeline for many, it is not always the best choice for all. Take your time and discuss your needs with your insurance agent to find out if there are other health insurance products that may serve your needs, and those of your family, better. At the very least you may find that there are other products that are more affordable during a time when money matters most.