A federal statute governing health insurance is called COBRA. In the event that you lose your work or quit, COBRA allows you to continue with your current employer-based coverage for at least the ensuing 18 months.
Your current health insurance will now cost extra. COBRA requires you to pay the entire cost, including the portion that your prior employer used to cover.
There are mini-COBRA legislation in several jurisdictions that could offer longer coverage months or more substantial benefits.
It hurts to lose your job. Fortunately, COBRA will prevent you from simultaneously losing your health insurance. The federal statute that created the COBRA programme, the Consolidated Omnibus Budget Reconciliation Act of 1985, bears its name. After certain work or family changes, COBRA protects employees and their covered dependents from losing their employer-based health insurance. For a period of 18 months, those who qualify may continue their current health insurance (or more, in some cases).
Continue reading to find out more about COBRA’s functioning, eligibility requirements, and cost.
What is COBRA medical coverage?
Your employer’s insurance and your COBRA health insurance are the same. Simply put, “having COBRA insurance” means that, following a qualifying life event, you and your covered family members will continue to use your employer’s group insurance.
Qualifying life events are alterations in your circumstances that could cause you or a member of your family to no longer be covered by your employer’s group health plan. Examples include:
- Termination of the insured employee from employment
- becoming a Medicare-eligible insured employee
- Divorce of the covered employee
- the passing of the insured employee whose family was protected by the policy
- The child of the insured employee turns 26 and outgrows family coverage.
How is COBRA put to use?
If your prior business offered group medical insurance and had more than 20 employees, you may be eligible for COBRA. People who obtain their employer-based insurance through: are not eligible for COBRA coverage.
- Organizations with fewer than 20 personnel
- Federal authorities
- churches and affiliated businesses
Benefits for insurance under COBRA are identical to those received by active employees. The same copays, deductibles, coverage restrictions, and appeals rights apply to COBRA coverage in the event that a claim is denied. Prescription drug coverage, vision care, and dental insurance will all be included in your COBRA if those benefits were part of your employer’s health plan.
However, these advantages will come at a higher cost to you because you will be responsible for paying the entire premium, including both your portion and the employer’s.
Who can purchase COBRA insurance?
You qualify for COBRA insurance if:
- You had joined the health programme offered by your employer.
- There are at least 20 people working there.
- The health programme is still in effect.
- You stopped being covered due to a qualifying event.
- The COBRA plan covers your spouse, ex-spouses, and dependant children as well.
What is insurance under the mini-COBRA?
Some states have “mini-COBRA” legislation that go beyond the parameters of the federal programme to expand insurance coverage. For instance, the mini-COBRA regulations in some states (including Texas and New York) permit coverage to last longer than 18 months. Or, for businesses with less than 20 employees, state mini-COBRA rules can be applicable. This clause is present in Florida and California.
The state law takes precedence over federal law if it provides more benefits than the federal COBRA law. You can find out if your state has mini-COBRA legislation using online resources.
What steps must I take to enrol in COBRA insurance?
You have 60 days to notify the administrator of your health plan that you want to enrol in COBRA. The plan administrator is then required to inform you and each covered family member of your COBRA rights. Each adult in the household will then have 60 days to choose or decline COBRA coverage.
Important details concerning guidelines and deadlines will be included in your COBRA notice, including:
- How to sign up for COBRA
- How quickly you must decide whether to enrol in COBRA
- The best way to alert the plan administrator
- the start date for COBRA coverage
- The longest possible period of coverage
- Your recurring monthly payment due date
- Any required retroactive premium payments
- Situations where the insurance coverage might be cancelled early
All relevant information about the premiums you’ll pay should be included in the COBRA notice. It will contain the sum and your available payment schedule options (weekly, monthly, or quarterly). Your election form won’t require payment, but you might need to deposit the initial payment within 45 days of submitting the form. Your COBRA rights could be lost if you miss that window. You have a thirty day grace period for paying other premiums. You risk losing your COBRA rights if you don’t make the grace period. Your coverage could be cancelled by the insurer due to late payments. However, if you pay inside the grace period, the coverage can be reinstated backwards.
After being laid off or having their normal work hours reduced, individuals are often entitled to 18 months of government COBRA continuation coverage. The length of time that your spouse and dependent children are covered might sometimes be up to 36 months.
On the day of the job loss or other qualifying event, coverage starts. Once you have paid the premiums for that time period, coverage is retroactive to that date even if you wait a bit to enrol. You have the option to revoke your COBRA coverage at any moment if you so choose.
What is the cutoff date for COBRA enrollment?
Your employer must provide COBRA information to you within 44 days after the later of your last day of employment or your last day of insurance coverage. However, it’s a wise move to speak with your benefits manager a few weeks after you depart.
Once your benefits expire, you’ll have 60 days to sign up for COBRA or another health plan. However, bear in mind that delaying enrollment won’t result in cost savings. You must pay your rates for the entire COBRA time because it always goes back to the day your prior coverage ended. One benefit of signing up right away is that your coverage won’t lapse as you continue to visit doctors and fill prescriptions.
You are able to preserve all of your prior benefits through COBRA. Your plan cannot be altered at this time. However, if you’re still enrolled in COBRA at the time of the subsequent open enrollment, you can select another plan from those that your previous employer provides to its employees. The new strategy shall go into action on January 1st.
When I leave my work, what COBRA alternatives are there?
If you lose your employer-sponsored insurance plan, COBRA isn’t your only choice. Depending on your circumstances, you can be eligible for additional health benefits:
Join the employer-sponsored plan of your spouse or partner. You can enrol in your spouse’s or partner’s plan during an unique enrollment period that is triggered by leaving your work. Your job loss enables you both to enrol outside of the typical open enrollment period within 30 days, even if your spouse isn’t currently enrolled in their employer’s plan. Learn how qualifying life events, such as getting married or having a child, affect your access to health care.
Select a plan using healthcare.gov’s health insurance marketplace. If you have a qualifying life event, such as quitting your work, you don’t have to wait until Open Enrollment in the autumn. Your benefits will begin on the first day of the month following the loss of your insurance, and you have 60 days to select a plan.
Join a trade or professional group insurance plan. National associations that provide benefits for independent workers, such as the National Association for the Self-Employed ($120/year membership fee; NASE.org), or the Freelancers Union, may be able to help you find plans with reduced premiums (free membership; freelancersunion.org). A self-employed status declaration is not necessary.
The Children’s Health Insurance Program may be available to families with low and moderate incomes (CHIP). If your income is too high to be covered by Medicaid, CHIP, which is jointly supported by the federal and state governments, may be able to help you provide your children with affordable coverage.