With unemployment at an all-time high across the country, families in all areas have lost their health insurance. Today, losing a job means more than a loss of income, for most families their health coverage is through an employer’s plan, and without an employer, the options are limited.
What is COBRA?
COBRA stands for Consolidated Omnibus Budget Reconciliation Act. This provides a way for former employees, retirees, spouses, former spouses, and dependent children to continue receiving health coverage at a discounted or group rate even after employment is terminated. This helps to ensure that people who need health insurance are not cut off cold turkey, but have a period of time (between 18 and 36 months) to receiving employer-based health insurance, until a suitable alternative is found.
What Is Covered?
COBRA coverage is no different than the original healthcare coverage you received while employed. It includes the same coverage, deductible, co-pays, and benefits. If the employer changes their coverage for active employees, those same changes will also apply to those enrolled in COBRA.
How Much Does COBRA Cost?
The only downside of COBRA is the cost involved. For employees, the employer generally pays a large portion of your healthcare benefits. Some even pay the entire premium. This gives employees the luxury of complete healthcare coverage at a minimal cost that is generally taken out of their paycheck. Once you lose your job, that cost is now handed down to you. Once you are enrolled in COBRA you will be responsible for paying the full cost of your healthcare premium. However, the rates are calculated as a group rate, rather than an individual policy rate, which can make COBRA more affordable than individual health coverage.
Who Qualifies for COBRA?
Generally, any employee who was receiving health benefits and is no longer employed can quality for COBRA coverage. An employee may be ineligible for COBRA if their loss of employment was due to gross misconduct, or if they were a part-time employee. Spouses may qualify for COBRA as a result of a divorce or separation, family members may qualify for COBRA after the death of the covered person. Individuals may also be eligible if their hours of employment are reduced and they are no longer eligible for employer-based health benefits. If the company goes out of business, it is unlikely that COBRA will be offered. Qualified beneficiaries have 60 days to decide whether or not to enroll in COBRA benefits.