Times are tough, and millions of Americans are out of work. But losing a job not only means a loss of income, it can mean losing your health insurance, too. If you were covered with a health insurance policy through your employer but have lost your job, COBRA can help keep you covered with affordable health insurance.
What is COBRA?
COBRA (Consolidated Omnibus Budget Reconciliation Act) provides qualified former employees, retirees, spouses, former spouses, and dependent children the right to continue receiving health coverage at group rates after employment is terminated. For example, if you are laid off from your job and need to continue receiving your employer-based health insurance, COBRA allows you to retain your healthcare benefits for a limited period of time (usually 18-36 months).
What Benefits Are Covered Under COBRA?
Those who enroll in COBRA are entitled to the same healthcare benefits as active employees. Unless your former employer has changed its benefits package, you will likely receive identical benefits as when you were employed. Any change in benefits for active employees will also apply to those enrolled in COBRA.
How Much Does COBRA Cost?
While you were an active employee, your employer likely paid a portion of your healthcare benefits-if not the entire premium. As a former employee enrolled in COBRA, you will be responsible for paying the full cost of your healthcare premium. However, being enrolled in COBRA allows you to pay group rates on your employer's group plan, which is usually more affordable than paying individual rates.
COBRA Qualifying Events
A qualifying event is a circumstance that makes someone eligible for COBRA benefits. The nature of the
qualifying event will determine an individual's eligibility for COBRA as well as the period of time that COBRA benefits will be offered.
If any of these qualified events occur, the employee and his or her dependents may become eligible for COBRA benefits:
- The employee's loss of employment for any reason other than gross misconduct
- A reduction in the employee's work hours that makes them ineligible for health insurance coverage under the employer's benefit plan
- The divorce or legal separation of a covered employee from a spouse
- The covered employee becoming eligible for Medicare benefits
- The death of the covered employee
Are You Eligible for COBRA?
If you lose your job due to any reason other than gross misconduct, you and your family members will likely be eligible for COBRA benefits. You may also be eligible if your hours of employment are reduced and you're no longer eligible for employer-based health benefits. To be eligible for coverage, you must have been enrolled in your employer's health plan while you were an employee, and your former employer must continue to offer health coverage to active employees. 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.
Not Qualified For COBRA, or Can't Afford It? Consider Individual Health Insurance
If you're not eligible for COBRA or find that the premium is too expensive, you may want to consider applying for an individual health insurance policy. At InsWeb.com, you can shop and compare health insurance quotes from top companies.