What Is COBRA Insurance?

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 and their families the right to continue their workplace health insurance coverage after a qualifying event occurs where they would otherwise lose their health plan. Workers use COBRA after voluntary or involuntary termination. This continuing health coverage is made available to former spouses after divorce, retirees before they begin Medicare and children that lose their dependent status.

How Much Is COBRA?

Because COBRA is the same work health insurance you previously had, you pay the entire premium, including the employer’s portion they were 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.

COBRA Is The Same Insurance You Had

By using your COBRA right, you simply have the same employer-sponsored health plan you just had before you lost it.

When you elect to stay on your employer’s 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 .

COBRA is Available For 18 or 36 Months

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 months. Depending on your circumstances, you may be entitled to 36 months of continued coverage.

When Should You Choose COBRA?

If you have had recent or ongoing health problems, often times its best to stay on your former employer’s group health plan. Learn more about when to choose COBRA or look for an alternative for continued health insurance.

You Can Get It, 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. Your COBRA rights allows you the option of keeping your workplace insurance if you quit your job or the company downsized.

Cancelling COBRA

You may cancel COBRA insurance at anytime. Just be sure to have a back up plan!

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Having Medical Insurance Coverage 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 to provide access to the same group health plan to workers, if that health insurance would stop or pay a penalty to the IRS. This means if you lose your work insurance, you may keep the same coverage you had.  The employer is responsible for notifying you of COBRA elgibility in a timely manner.

You May Be Eligible For COBRA Health Insurance

Continuation of workplace benefits requires an eligible qualifying 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. As long as you were enrolled in a qualified group health plan for one day, you can continue that same insurance.

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.

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.

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