What is COBRA Insurance? Although
COBRA insurance is a very common term, it is NOT
insurance - It is an Act. In 1986, Congress passed the COBRA
Act that contains provisions giving certain former employees, retirees,
spouses and dependent children the right to temporarily continue
their current health coverage at group rates. This coverage,
however, is only available in specific instances Read More.
The
cost to continue your group health insurance benefits after job
loss, layoff or a reduction in hours can be costly.The national average cost of employer provided family health
coverage under COBRA is over $590 per month.If you are among the 81 percent of people eligible for COBRA
but elect not to take it due to the cost, don’t risk going without
health insurance. Affordable alternatives (Short
Term Health Insurance) are available in every states except
MA, NJ, NY and VT. Short term health insurance plans do
not cover pre-existing conditions or routine wellness exams - but,
if your healthy it may be a good choice. Get an Instant Online
Quote for an alternative to COBRA
insurance.
Who
is entitled to benefits under COBRA?
There are three
elements to qualifying for COBRA benefits. COBRA establishes
specific criteria for plans, qualified beneficiaries, and qualifying
events:
Plan Coverage - Group
health plans for employers with 20 or more employees on more than 50
percent of its typical business days in the previous calendar year
are subject to COBRA. Both full and part-time employees are
counted to determine whether a plan is subject to COBRA. Each
part-time employee counts as a fraction of an employee, with the
fraction equal to the number of hours that the part-time employee
worked divided by the hours an employee must work to be considered
full time.
Qualified
Beneficiaries - A qualified beneficiary generally is an
individual covered by a group health plan on the day before a
qualifying event who is either an employee, the employee's spouse,
or an employee's dependent child. In certain cases, a retired
employee, the retired employee's spouse, and the retired employee's
dependent children may be qualified beneficiaries. In
addition, any child born to or placed for adoption with a covered
employee during the period of COBRA coverage is considered a
qualified beneficiary. Agents, independent contractors, and
directors who participate in the group health plan may also be
qualified beneficiaries. Learn
more about who is entitled to benefits.
If
I elect COBRA, how much do I pay?
When you were an
active employee, your employer may have paid all or part of your
group health premiums. Under COBRA, as a former employee no
longer receiving benefits, you will usually pay the entire premium
amount, that is, the portion of the premium that you paid as an
active employee and the amount of the contribution made by your
employer. In addition, there may be a 2 percent administrative
fee.
While COBRA rates may
seem high, you will be paying group premium rates, which depending
on the risk pool, can be more or less than individual rates.
Since it is likely
that there will be a lapse of a month or more between the date of
layoff and the time you make the COBRA election decision, you may
have to pay health premiums retroactively-from the time of
separation from the company. The first premium, for instance,
will cover the entire time since your last day of employment with
your former employer.
You should also be
aware that it is your responsibility to pay for COBRA coverage even
if you do not receive a monthly statement.
Although they are not
required to do so, some employers may subsidize COBRA coverage. Get
a quote on an alternative medical plan by visiting the Short
Term Medical section of this site.
For More Information Contact: Long Term Consumer Care, Inc
