Consolidated Omnibus Budget Reconciliation Act (COBRA) insurance coverage was designed to provide people with a way to keep their existing health insurance for a period of time, until their new coverage takes effect.
How Do You Qualify for COBRA?
To be covered by COBRA: Employers often meet the standard if they have more than 20 full-time employees. Churches and some other organizations, as well as health plans sponsored by the federal government, are exempt. Being a qualified beneficiary means you were covered by the employer-sponsored plan at the time you lost coverage. Your spouse and other dependents may also be eligible. Potential qualifying events include termination for any reason other than gross misconduct or reduced hours. For spouses and other dependents, there are a few other qualifying events, such as divorce or separation from the covered employee; the death of the covered employee; the covered employee becoming eligible for Medicare; or loss of dependent-child status.
How to Sign Up for COBRA Coverage
Employers must inform those who are qualified about COBRA eligibility within 14 days of a qualifying event. Then there are 60 days to elect coverage. Beneficiaries can decide for themselves whether they want to sign up for COBRA or waive the option. Anyone who waives COBRA can later revoke their waiver and sign up in the future, as long as they do so within the election period. You can use COBRA for up to 18 months. COBRA allows for the families of employees who have died to use the insurance for 36 months. COBRA coverage must be equal to what was offered under the employer’s plan.
Reasons Not to Pay for COBRA
There are some factors you should keep in mind when thinking about whether or not to use COBRA, such as the cost. COBRA requires employers to keep you on their insurance for as long as you need it, or for the maximum time frame, but COBRA does not mandate that they pay for it. Your cost could be up to 102% of the total cost of the premium. The extra 2% may be an “administrative” fee. You and your children also may be eligible to be covered under your spouse or partner’s health policy.
How to Pay Your COBRA Insurance Premium
You may pay your COBRA premium directly to the employer’s insurance company, or you may pay it to a COBRA admininstration company. When you sign up, you will get clear instructions on where to send payment. Be sure you keep making payments as long as you need the insurance. If you stop paying, your coverage can be canceled.
Keep All Documents for Your Records
If you opt out of the COBRA option, you will receive a letter from the employer’s insurance company stating the dates that you were covered. You should keep all records of coverage, in case you need them to prove you were covered during a period of time. For instance, the insurance company covering you might try to deny coverage by claiming that your policy had expired. Any records you keep can help you dispute the denial of coverage.
