What is COBRA Insurance And Do I Need It?
The Federal COBRA Act gives workers and their qualified dependents the right to continue their workplace health insurance, if that coverage would end due to a qualifying event.
COBRA Insurance Is A Federal Law
In 1985, the United States government passed the Consolidated Omnibus Budget Reconciliation Act or COBRA, for short. The law gave workers the right to continue their workplace health insurance coverage after certain qualifying events occur where they would otherwise lose their insurance coverage. The same group health plan coverage is further extended to spouses, ex-spouses and dependent children under the age of 26.
Workers and Families Keep Their Same Benefits
When you elect to stay on your employer-sponsored health insurance, you keep your same doctors, copays and prescription coverage. If you had dental and vision coverage previously, then your COBRA will have dental and vision .
The Cost Of COBRA Insurance
When you participate in a qualified COBRA Insurance plan, you pay the entire premium, even the employer’s portion that you are used to them paying.
The Good And The Bad
If you have pre-existing conditions or require many visits to the doctor, continuing your former health plan may be the best option. Though, the cost of paying the insurance company premiums out of pocket while you’re in a job transition may cause financial hardships.
Having Medical Coverage Insurance Is The Law
The Affordable Care Act (ACA) was signed into law in 2010 and made significant changes to health care requirements. The ACA mandates all U.S. Citizens to have health and medical insurance.
Employers Are Required To Provide Continuing Coverage
The COBRA legislation requires all companies with 20 or more full-time employees provide health insurance to employees or pay a penalty to the IRS. This means if you lose your work insurance, you may keep the same coverage you had.
The Good And The Bad
The good news for many people is that a COBRA health plan from their former employer satisfies the individual ACA mandate, while protecting their families health and wellbeing as they previously had. COBRA insurance coverage may last up to 18 weeks. Depending on your circumstances, you may be entitled to 36 months of continued coverage. Though, you must be aware that you are now responsible for the entire cost of coverage.
Some States Have Mini-COBRA
The federal COBRA act is in force for all companies with 20 or less employees. Many states have their own laws regarding continuation of workplace insurance. These “Mini-COBRA” laws may allow works more time to continue the insurance after the federal time period has been exhausted. You’ll have to check if your state has additional insurance laws.
COBRA Is Retroactive
Your previous workplace’s plan administrator should give you a COBRA election form within 45 days from your job ending. You then have have 60 days to elect coverage or waive your right to it. Your COBRA coverage will then be retroactive to the date your insurance had ended.
When Should You Choose COBRA Insurance?
If you have had recent or on going health problems, often times its best to stay on your former employers group health plan.
Learn more about when to choose COBRA insurance.
You May Be Eligible For COBRA
Continuation of workplace benefits requires an eligible qualifying workplace event, such as job loss, temporary reduction in hours or a family related event such as death of the covered employee or divorce from a spouse. When a qualifying event occurs, a special open enrollment period opens where your past employer is required to offer a continuation of your medical insurance coverage.
You Can Get COBRA, Even If You Quit Your Job
If your employer is required to allow you continuation of their group health insurance, then it doesn’t matter how your job ended. You are entitled to the option of workplace insurance if you quit your job or the company downsized.
AFFORDABLE COBRA ALTERNATIVES
If the cost of COBRA insurance is too much, you may want to consider a short-term medical plan.
If you are in reasonably good health and without pre-existing medical conditions, there are affordable temporary health insurance plans options available.