COBRA Coverage & Rights

What the heck is COBRA coverage? COBRA stands for Consolidated Omnibus Budget Reconciliation Act (COBRA) in 1986. This law amends the Employee Retirement Income Security Act, the Internal Revenue Code and the Public Health Service Act to provide continuation of group health coverage that otherwise might be terminated. So, if you are leaving a job where you have a group health plan for another job and you are going to experience a lapse in coverage, COBRA is your answer. However, you will have to check your eligibility: COBRA only applies to certain situations and certain employers.

In general, to be eligible for COBRA coverage, you must have been enrolled in your employer's health plan when you worked and the health plan must continue to be in effect for active employees at that employer. If these conditions are met, then COBRA continuation coverage is available upon:

  1. Voluntary or involuntary termination of employment for reasons other than gross misconduct
  2. Reduction in the number of hours of employment (which would cause you to lose coverage)

Does COBRA cover your employer?
You will have to do some research to be sure. For your employer to be under COBRA, your employer must be a private-sector employer with 20 or more employees, an employee organization, or a state or local government and be providing a group health plan. If your employer fit's this description and has more than 20 full time employees (or equivalent in part-time), you should be able to get COBRA coverage.

How do you elect COBRA continuation coverage?
Well, the first part of the process is the responsibility of your employer (although you or your family should be following up to ensure the correct paperwork is being done on your behalf). Employers must notify plan administrators within 30 days after an employee's death, termination, reduced hours of employment or entitlement to Medicare. Plan participants and beneficiaries generally must be sent an election notice not later than 14 days after the plan administrator receives notice. You then have 60 days to decide whether to elect COBRA continuation coverage. Once you have elected coverage, you have 45 days to pay the initial premium. Even in the case of a death, this should give your family time to react and ensure continuation of insurance.

What does this all mean?
It means that your insurance coverage can continue after you have lost your job, you have died (which means that your spouse can continue coverage), or have lost your insurance coverage for some other reason, such as reduction in hours. Rather than these events terminating your coverage, COBRA ensures that you can continue to have insurance.

Now, COBRA only provides for a kind of bridge insurance, until you can find another insurance policy. COBRA coverage will not continue indefinitely. It is meant as a stopgap measure, to ensure that those who have insurance and want to continue it can do so without interruption.

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