The Consolidated Omnibus Budget Reconciliation Act of 1985, more commonly know as COBRA, is a federal law that guarantees your heath insurance coverage will remain in effect for up to 18 months should you be terminated from your job. Most companies that provide groups insurance to their employees are mandated to abide COBRA. In some circumstances, the coverage period can be extended from 18 months to 29 months or even up to 36 months.
COBRA Insurance: Who Benefits from It?
If you have lost your job and you stand a chance of losing your health insurance benefits as a result, you are protected by COBRA. As a stand-by facility, COBRA can help you get through a tough time. However, COBRA insurance does not apply to every terminated employee. Employers need to know if the COBRA exclusion applies to their companies and employees.
If you have been recently terminated, the law allows you to get a health insurance for yourself (and your family, if you had family coverage while you were employed) at the group rate even though you are not employed anymore. Coverage is not cheap and you will have to pay the total cost each month along with a 2% surcharge.
If you are terminated, laid off or experience some kind of change in your employment status, such as reduced working hours, divorce from or death of the eligible employee), and you are qualified for COBRA, COBRA will continue to cover you for at least 18 months or until you get a new health insurance plan or a group health insurance plan.
The law mandates that employers notify eligible former employees of the available option to obtain health insurance through COBRA. Employees would also have to specify the price for this coverage. Employees who are notified of this option have up to 60 days to agree to COBRA coverage.
As COBRA essentially increases a terminated employee’s health insurance coverage by 18 months, you don’t have to be concerned about any changes in your benefits, should you choose COBRA coverage. Under COBRA, your health insurance coverage will not change; the only change is that you will be responsible for paying the monthly premium. If you have your family covered by your company’s group insurance, they will still be covered by COBRA. The only way that any changes will occur on your coverage is if your former employer makes modifications on the health insurance plan it is offering to employees.
COBRA Insurance: It’s only Temporary
COBRA is meant only as a temporary, but a very important, measure. COBRA ensures that you would have health insurance for 18 months. However, you will no longer have health insurance once the 18 months are up, unless you have not gotten an individual health insurance plan or a group insurance plan from your new employer.
And, hopefully you would never find yourself in a position where you discover for the first time that you have a severe medical condition, such as cancer, while you are under COBRA coverage. Should this happen, you would then become “uninsurable” because of a pre-existing condition.
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