COBRA Insurance Coverage
In the mid 1980s the federal government adopted the "Consolidated Omnibus Budget Reconciliation Act." It is also known as COBRA. It was designed to protect employees’ health insurance coverage when they lose their job through no fault of their own. COBRA insurance coverage goes with the employee as a temporary medical insurance coverage to provide for medical care for them and their family for up to 18 months if they suffer a job loss in which they had medical insurance benefits. In some instances the insurance coverage can be extended to up to 36 months such as the loss of coverage due to divorce, disability, and other specific situations.
COBRA insurance coverage is usually available for people who have been covered under a group policy through an employer who has at least 20 employees working for them. If you are laid off or your employment is terminated then your employer is obligated to inform you on the guidelines laid out according to the law regarding your continuing medical insurance coverage option that is available to you.
COBRA insurance coverage is also available to those who are eligible with regard to pending cases when there is a death in a family, waiting for medicare eligibility or those who are in the process of getting a divorce or legal separation. Under COBRA, a divorcing spouse is also eligible for insurance coverage. COBRA insurance coverage goes into effect as soon as the employee is released from work. The employer is not obligated to pay the premiums, but the former employee can continue the insurance coverage by paying the premiums themselves. You must pay the first premium payment 45 days after you elect the coverage and you may have to pay retroactive payments to cover the 45 day interval. You can not be denied group insurance coverage for any other reason unless you waited to long to apply for it. The policy is to be used to benefit the employee who has suffered a job loss and who in between jobs, has been laid off, during strikes, seasonal workers and temporary workers. This means you will have up to 18 months to secure another job before you lose your health insurance benefits.
The employer is obligated to inform you of your eligibility for insurance coverage within 30 days of departing from your previous job. The employer then has 14 days to offer you the continued coverage option. After that you have up to 60 days to let your former employer know if you want to accept the offer or decline it. If you are fired from work and denied coverage you should ask request a hearing on the matter. If you are getting a divorce you need to apply for COBRA coverage within 60 days of losing your insurance coverage as well. If you wait longer than that the insurance company can decline you.
The employer is supposed to send you an election notice to continue participating in the group insurance coverage. Federal law only covers people who are in group plans at the time of the loss of insurance coverage. Once you elect to participate in COBRA the premiums have to be maintained for continued coverage. COBRA insurance coverage may not be right for everyone. The premiums may be more than you can afford. Until 2009 former employees had to pay 100% of the premium amount. In 2009 the (American recovery and investment act) went into effect. Now former employees may only have to pay for 35% of the premium price for the first 9 months. After that they have to pay 100% of the premium amount for the remaining 9 months. You may be able to find a private insurance policy that would be less expensive than the one you can get under COBRA. Of course, that may depend on your age and whether or not you have pre-existing medical conditions. You can always contact your former human resources department for more information about your health care options under COBRA.