Cobra insurance coverage

COBRA insurance – No, it’s not insurance against snake bites! COBRA stands for the Consolidated Omnibus Budget Reconciliation Act of 1985 – the federal law that protects your right to continue health benefits – even if you change jobs, divorce from the spouse who carries the insurance in your family, reach the age where you are no longer a dependent on your parent’s health plan, or would otherwise lose benefits for certain other reasons.

Though it’s sometimes referred to as COBRA insurance, COBRA really isn’t insurance at all – at least not in the way we think of a normal insurance policy. But it is your protection or assurance that health benefits will still be available to you in circumstances where you might otherwise have lost them in the past. Let’s take a look at some of those instances:

· If you quit your job;

· If you get a divorce or legal separation;

· If your spouse – who is the employee and carries the health insurance coverage – dies;

· If you are a covered dependent under your parent’s policy who becomes ineligible and is no longer considered a dependent – such as when you turn a particular age or quit attending college;

· If you or your spouse – who is the employee and carries the health insurance – retire;

· If you or your spouse – who is the employee with the health benefits – becomes eligible for Medicare.

COBRA ensures that you have access to the same health benefits you had prior to the event or change. However, the chances are pretty good that your employer was paying for a portion of those health benefits for you prior to the qualifying event that triggered the applicability of COBRA.

COBRA lets you elect to continue your health benefits without interruption for a specific timeframe, but it will be entirely at your own expense – and perhaps just slightly more. Employers can charge up to 102% of the premium, keeping the extra 2% to cover their administrative expenses in continuing to handle the paperwork.

And the timeframe – while pretty generous – is still limited. Under most circumstances, you can continue health benefits for 18 to 36 months.

Here are some examples of how COBRA might apply to you and how it would impact the actual cost of your health benefits:

If you quit your job and you were previously paying 50% of the cost of your health benefits, while your employer kicked in the other 50%, you can elect to continue those benefits for a period of time, but you will need to pay 100% of the cost to do so.

If your spouse carried your family’s health insurance plan through his or her employer and the two of you divorce, you can elect to continue the health insurance, but you will likely be responsible for a larger portion of the premium. Certainly, the employer will no longer want to pay for your portion of the insurance policy, and depending on what the court orders as to who is required to pay for coverage for you and/or your children, your costs may vary, but it will definitely cost you and your ex-spouse more overall than the same family plan did when you were married and the employer subsidized a portion of the premium.

If you are covered under your spouse’s health benefits plan through your spouse’s employer and your spouse dies, COBRA ensures that you can continue those health benefits for yourself for a period of time. Again, however, the employer is unlikely to continue contributing to the cost and you will need to pay for it all out of your own pocket.

COBRA provides for continued access to health benefits for many people who would otherwise lose their coverage, but it does not address the affordability of those benefits. As a result, many individuals who are eligible to continue their coverage under this law do not do so, indicating they cannot afford the high cost of the continuation coverage.