Continuation of Your Health Coverage (Cobra)

Ever wondered how to handle the health insurance situation when you leave that stress-inducing, low-paying job? Here’s a low down on continuation of your health coverage (COBRA) stands for Consolidated Omnibus Budget Reconciliation Act, which gives some employees the right to continue and pay a premium for the group health insurance even after a loss of employment. An employee will lose health insurance coverage in the event of their work hours being reduced, if they quit their jobs or in case they lose their jobs. In most cases, the COBRA insurance coverage can be continued by an employee for about 18 months while in some cases it can be longer. The length of the coverage depends on the qualifying event. Qualifying events under the COBRA continuation coverage for employees as well as their dependents are listed below.

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If the employee has been laid off, has resigned or his/her employment has been terminated (except for gross misconduct)
If the work hours have been reduced
For the dependents
- Death of the insured employee
- Divorce or legal separation with the insured employee
- Dependent status being lost
- Employee becoming eligible for Medicare

A dependent can enroll for COBRA continuation coverage even if the employee hasn’t. The summary of plan description (SDP) given by your employer will have all the details about how to go about in case of a qualifying event. Every employer needs to inform the employee about his/her health insurance and COBRA rights within 14 days of a qualifying event.

Costs and payments with COBRA continuation coverage
COBRA health insurance premium includes the full cost of group health coverage, the share of employee and employer, and an additional 2% going towards administrative costs. Once the duration of 18 months is over, you are given an 11-month disability extension. But in this case, the employer can increase the cost by up to 150% of the actual insurance cost.

Benefits of COBRA health insurance
All COBRA continuation coverage beneficiaries are entitled to the same benefits of the plan, but they do not qualify for the COBRA scheme. The benefits do not change for the beneficiary after the qualifying event. If benefits under the plan change for active employees, the change is applicable to the qualified beneficiaries as well. Additionally, COBRA beneficiaries are given the same choices as the active members, like during the period of open enrolment by the plan. There is a one-day rule for COBRA eligibility and it applies to you and your dependents as well. This means you are eligible for the benefit if you were covered by the plan a day before a qualifying event.

Opting out of COBRA continuation coverage
If you do not wish to continue with the COBRA coverage after a qualifying event, do not wish to abide by the COBRA insurance rules, or pay premiums for the same, you will be given a special enrolment period on your state health insurance marketplace. This will enable you to enroll in a marketplace insurance plan outside of the open enrolment period in the marketplace. There will be a 60-day period for you to select and enroll in a marketplace plan. COBRA can be a useful option if you are between jobs and have missed the open enrolment period.