COBRA Insurance Information
Losing a job is hard. Fortunately, you don’t need to lose your health insurance at the same time, thanks to COBRA. The COBRA program is named after the Consolidated Omnibus Budget Reconciliation Act of 1985, the federal law that established it.
COBRA coverage protects covered employees and their dependents from losing their employer-based health insurance coverage after some specific family or job changes. Eligible individuals can keep their existing health coverage for 18 months or more. Below, we will explore the basic details of COBRA, how it works, its eligibility criteria, advantages and disadvantages, and other features.
Contents
What is COBRA Health Insurance?
The American Recovery and Reinvestment Act of 2009 includes the Consolidated Omnibus Budget Reconciliation Act or COBRA assistance provides coverage to the eligible individuals with a 65% reduction in their COBRA premiums. for up to 9 months.
Large employers in the US, those with 50 or more full-time workers, are required to provide health insurance to their qualified employees by paying a portion of the insurance premiums. COBRA allows an employee and their dependents to keep the same insurance coverage for a limited period of time, as long as they are willing to pay for it out of pocket.
Under COBRA, former employees, spouses, ex-spouses, and dependent children must be offered the option to continue health insurance coverage at group rates, which would otherwise be canceled.
Who is Eligible for COBRA Health Insurance?
There are different sets of criteria for different employees and other people who may be eligible for COBRA coverage. In addition to meeting these criteria, eligible employees generally can only receive COBRA coverage after particular qualifying events. You may qualify for COBRA coverage if your work or life situation has changed. Here are some of the ways you can qualify:
- The departure of the insured worker from work
- The insured employee becomes eligible for Medicare
- The Insured Worker’s Divorce
- The death of the insured employee whose policy covered his family
- The insured employee’s child who turns 26 and is out of family coverage
- You experience a qualifying event, such as the death of the covered employee, divorce or legal separation from the covered employee, or another event that may entitle you to COBRA coverage
How does COBRA Insurance Work
You can apply for COBRA if your former employer had more than 20 employees and provided you with their group health insurance. COBRA health coverage is not available to individuals who get their employer-based insurance through:
- Companies with less than 20 employees
- The federal government
- Churches and related organizations
Insurance benefits under COBRA are the same as those earned by active employees. COBRA coverage has the same copays, deductibles, coverage limits, and appeal rights in the event of a claim denial. If your health plan at work included prescription drug coverage, vision care, and dental insurance, your COBRA will also have all of those features.
Cost of COBRA Health Insurance
COBRA premiums cost more even if you get the same level of insurance coverage. This is because you must pay the entire health insurance premium yourself. In addition, a small administrative fee of up to 2% may apply. Costs cannot exceed 102% of plan cost for employees who have not experienced a qualifying event.
Therefore, even though group rates are available for the COBRA continuation plan in the post-employment period, the cost to the former employee may increase significantly compared to previous insurance costs. During the pandemic, the federal government’s American Rescue Plan provided premium subsidies to help cover the cost of COBRA. But this COVID-19 related all assistance program expired on September 30, 2021.
What are COBRA Insurance Coverage Limits?
COBRA coverage is only a short-term solution, so it’s a good idea to explore other options. In addition to the general time limit of 18 to 36 months, there are a couple of other reasons your COBRA coverage may end.
- You do not pay your premiums on time.
- Your former employer stops offering group health plans.
- You get comparable coverage through a new job.
- You become eligible for Medicare.
COBRA Health Insurance: Pros and Cons
Here are some important advantages of COBRA coverage:
- A person who chooses COBRA coverage can continue with the same doctor, health plan, and providers in the medical network.
- COBRA beneficiaries also retain existing coverage for pre-existing conditions and any regular prescription drugs.
- COBRA coverage plan cost may be lower than others available standard plans
There are also some downsides of COBRA coverage like:
- The high cost of insurance when borne entirely by the individual, the limited period of coverage under COBRA, and continued reliance on the employer.
- If the employer chooses to discontinue coverage, a former employee or related beneficiary will no longer have access to COBRA.
For these reasons, individuals eligible for COBRA coverage should weigh the pros and cons of COBRA versus other available individual plans to select the best possible fit.
How to Apply for COBRA Health Insurance?
To begin COBRA coverage, an individual must confirm that they are eligible for assistance in accordance with the requirements listed above. If you have any difficulty determining if you are eligible for COBRA or how to start coverage through this program, contact the insurer or your former employer’s human resources department.
For people who are not eligible for COBRA or who are looking for alternatives, there are other options. Remember that in some cases spouse’s health insurance coverage may be a possibility. Eligible individuals for COBRA have at least 60 days to select the participants for the program. For more information, you can able to call them.
Conclusion
COBRA continuation coverage can help you maintain your work-based health insurance after a change in employment status or family circumstances. But it can be very expensive since you pay the full premium yourself plus an administrative fee. So before you sign up for COBRA, check out other insurance options. An ACA plan can be much cheaper, especially if you qualify for premium tax credits or cost-sharing subsidies.
COBRA Insurance Information.