Basics of COBRA

It is very important if you have health insurance provided by your employer that you understand what your rights are under COBRA (Consolidated Omnibus Budget Reconciliation Act). This important legislative act guarantees that workers participating in their employer’s health insurance program, as well as their dependents, have the ability to have their health insurance coverage extended after they leave their place of employment under specific circumstances and for specified periods of time.

Before COBRA was passed, as soon as an individual was not employed access to his or her group health benefits were immediately stopped. Individuals with pre-existing conditions often could not obtain new insurance coverage. Under COBRA, individuals can elect to continue participating, at their expense, in the employer’s group health plan after qualifying events that lead up to them leaving their employment are met. It can expensive to do this, but it is better than becoming uninsured and all the consequences that follow.

If you quit your job voluntarily, you can elect to continue your employer’s group health insurance coverage for a maximum of 18 months after leaving your employment. You are also eligible if your employer terminates you unless you committed gross misconduct. For employees whose work hours are cut which results in them losing eligibility for full-time benefits, they can also choose to continue their coverage under COBRA.

There are certain conditions where COBRA coverage may be available for more than 18 months. If an individual becomes disabled and is unable to go back to work, they become eligible for 11 additional months of health insurance coverage under COBRA, making the total amount 29 months. If an individual dies who has covered dependents, the dependents are eligible for up to 36 months of coverage, as well as dependents who lose their coverage due to a divorce.

It is important to keep in mind that former employers are not responsible for covering any expenses of health insurance coverage for former employees who are continuing their coverage under COBRA. If you decide to go with COBRA coverage you will have to pay the entire cost of coverage to your former employer and may also be subject to an administrative fee.

If you elect COBRA coverage and then fail to make your premium payments, your former employer can stop your coverage. Your must make your first premium payment within 45 days of when you elect the coverage. Your subsequent premium payment due dates will vary depending on your particular plan. There is a 30-day grace period, which is required under COBRA, for making premium payments. After the grace period is over, your former employer can terminate your coverage.

Instead of having to obtain individual coverage or go without insurance, COBRA gives individuals the ability to continue their coverage for a temporary period of time after their eligibility for health benefits is over. COBRA can be quite expensive, but it is better than having no health insurance coverage at all.