A Summary of COBRA

What’s worse than losing your job? You might be thinking about the loss of insurance, which is a great loss in itself. The good news is that you will not always be left hung out to dry. Even if you lose your job or quit, you may still be covered under COBRA. Sometimes you will be able to use a conversion policy to purchase an individual plan, but COBRA is more reliable as an immediate form of coverage after your plan ends.

There are 3 criteria that you must meet in order to receive COBRA. You must have worked under a large employer with 20 or more coworkers, although if you worked for a smaller employer you may be eligible for continuation coverage. You must also be covered/have been covered under the group health plan or be the dependent of someone who was covered by the group plan. Also, there has to be some event that causes you to lose your group health insurance.

The loss of a job, regardless of whether you were fired or you quit, is considered an acceptable event for employees applying for COBRA. However, the reason for leaving the job cannot be related to salary or misconduct. If you are the spouse of the person who was under the group plan, the events considered for COBRA are your spouse losing his or her job, your spouse becomes eligible for Medicare and therefore does not have the same insurance anymore, you and your spouse are divorcing and legally separating, or your spouse left you a widow. Furthermore, if the person with the insurance dies, all dependents including children are eligible for COBRA. Children who lose dependent status for whatever reason may also apply.

You can obtain COBRA for your dependents or they can apply separately. Any person who qualifies for COBRA can choose to use it or not use it. You must use up any continuation coverage you may have before being eligible for the COBRA coverage.

You must be informed of the COBRA rights and options upon signing up for a group health plan, and again if and when you qualify for the COBRA coverage.

If the reason for applying for COBRA involves a death or termination of job, the employer has 30 days to relay that to the insurance provider. If it is a personal qualifying event, you have 60 days to contact your group health provider. The provider than has 14 days to give you a response and status of your application. Your family members also have 60 days to apply for COBRA.

Once you obtain COBRA, you will have to pay for premiums dating back to the event that qualified you for coverage. So if you lost your job two months ago and just got COBRA, you will have to pay for those two months that have passed and then also the new premium amount.

Your benefits under COBRA will be the same that you had under your insurance plan. If the employer changes the benefits package after your qualifying event, you will be able to receive those additional or different benefits as well.

You will not be susceptible to pre-existing conditions hoopla under COBRA, unless you were in an exclusion period when your qualifying event occurred.

COBRA coverage costs the same as the normal insurance premium plus two percent for administrative fees. If you choose the disability extension, it will be 150 percent more than the total cost of coverage.

COBRA coverage lasts 18 months if it is due to job termination or cut in hours. You can be covered for 36 months under COBRA if your qualifying event was related to Medicare, divorce or death. When children lose dependent status, they can receive COBRA for 36 months. For those with disabilities, coverage can go up to 29 months.