Most of us would have heard the term COBRA popping up when leaving a job, being laid off or in the process of a divorce. COBRA or the Consolidated Omnibus Budget Reconciliation Act of 1985 was instituted to allow people to continue health care insurance coverage provided by their employers even after they have retired or been terminated from work or by spouses after a divorce, as long as they pay the premiums themselves. This act, while a boon for those laid-off or divorced, is confusing to many. I’ve tried to simplify as much as possible a few salient facts about COBRA :
• You qualify for COBRA if you work for a company that has more than 20 employees, are covered under a group plan as an employee of the company who has retired or been terminated or a spouse, ex-spouse or a dependant child of such an employee.
• COBRA coverage does not last forever – you’re covered for up to 18, 29 or 36 months of coverage depending on both the qualifying event (termination, retirement, death or divorce) and the beneficiary’s status (employed, capable of earning). Termination or reduction of working hours enables you and your dependants for coverage up to 18 months, divorces, legal separation and death get your dependants 36 months of coverage, and dependant children who lose their dependant status get up to 36 months.
• Most people find insurance a more costly affair once they’ve signed up for COBRA after a lay off and wonder why. This is because your employer pays a part of your premium while you’re a full-time employee. So if thought your monthly premium was $350 and are presented with a bill for $663 at the end of each month when on COBRA, don’t be surprised or shocked. It only means that your employer has been paying $300 for you – the $13 is the 2 percent administrative fee you’re obligated to pay under COBRA. Before you sign up for COBRA, find out from your employer how much premium you have to pay each month.
• Don’t wait too long to find your own insurance even if your coverage under your employer’s plan lasts you for a long period of time. Start looking for alternatives at once. It’s going to be a difficult process, especially if you’ve just lost your main source of income. But consider the alternative - if you suffer a serious medical complaint in the time you’re still under your COBRA coverage, it’s going to be doubly hard and much more expensive to procure your own health insurance. Also, you may not get coverage for the said complaint and its related diseases in your new plan.
• You lose your coverage under COBRA if you’re eligible for Medicare, if you miss out on paying a premium, if your employer stops maintaining a group health plan or if you obtain coverage that is not subject to any limitations under another health plan.
• COBRA coverage is suited for those who are already being treated for some illness under the current plan and for those whose next employer does not offer healthcare coverage.
• If the beneficiary becomes disabled within 60 days of COBRA election, coverage is extended for another 11 months.
• While the first premium must be paid 45 days after election, you can pay other premiums monthly, weekly or quarterly.
• Federal employees are not covered by COBRA
Sarah Scrafford is an industry critic, as well as a regular contributor on the subject of RN. She invites your questions, comments and freelancing job inquiries at her email address: firstname.lastname@example.org.