COBRA Health Insurance: What You Need to Understand About COBRA Health Insurance
Nobody wants to think about losing a job, but it does happen. And when you lose your job, you don’t want to lose your health insurance too. And you don’t have to, under the Consolidated Omnibus Budget Reconciliation Act (COBRA). COBRA is a law that provides former employees, retirees, spouses, former spouses and dependents the right to temporarily continue health insurance under the former employer’s group plan. The premium will be higher because the employer usually only pays premiums for active employees. The former employee will have to pay the entire premium in order to receive coverage. Since it’s a group plan, it is still typically less expensive than an individual health plan.
COBRA applies only to employers having at least 20 employees on more than 50% of its business days in a calendar year. In order to be eligible for COBRA coverage, you must have been enrolled in your employer’s health plan while you were employed and the health plan must still be in effect for active employees. There are also qualifications you must meet in order to receive COBRA coverage.
To qualify for COBRA, you must be what is called a qualified beneficiary under COBRA law. A qualified beneficiary is someone covered by the employer’s group health plan who is either the employee, the spouse, or a dependent child. In some cases, a retired employee, spouse and children may be considered qualified beneficiaries. Additionally, independent contractors, agents and directors participating in the group health plan may also be beneficiaries.
There must also be a qualifying event in order to qualify for insurance coverage under COBRA. A qualifying event is an event that causes someone to lose health insurance coverage. For an employee, spouse, or dependent child a qualifying event is voluntary or involuntary termination of the employee for any reason other than gross misconduct, or a reduction in the number of hours of employment (a full-time employee goes part-time). For spouses and children, qualifying events also include the covered employee’s becoming eligible for Medicare, a divorce or legal separation of the employee, or death of the employee.
Your employer or plan administrator must provide you with an election notice within 14 days of the qualifying event. At that time you may choose to elect COBRA coverage.
