Cobra Coverage

COBRA Coverage

COBRA refers to the Consolidated Budget Reconciliation Act of 1985, and specifically to Title X of the Act. The provisions of Title X include provisions to provide members of company health plans who have lost their coverage due to a "qualifying event" to continue coverage at the employee's expense for a period of time. The law states that if an employer wishes to take a tax deduction for health insurance costs, the employer must provide employees who have been covered by the plan the right to continue coverage at the employee's cost (at the group rate) for a period of time. Through this, terminated employees or their families who may lose coverage because of termination of employment, death, divorce, or other life events may be able to continue the coverage under the employer's group health plan for themselves and their families for limited periods of time.

To qualify for COBRA benefits the employee must be employed by an employer who has 20 or more employees (part-time employees are considered at a percentage of full-time). The employee must have quit voluntarily or have been involuntarily terminated for reasons other than gross misconduct, or had hours reduced so as to no longer qualify for health coverage. A spouse may be eligible for coverage under the same circumstances as the employee (above), or if the employee is eligible for Medicare, or if the spouse and employee are divorced or legally separated, or upon the death of the employee. A dependent child may be eligible for coverage under the same circumstances as the spouse and also if the child loses dependent status under the employer's plan rules. COBRA covers any medical, dental, vision, death, accidental death, and dismemberment coverage offered to employees. Small businesses employing between 2 to 20 employees fall under mini-COBRA, which is the same as COBRA but with reduced duration.

Employers must assure that the COBRA coverage provided to eligible recipients is identical to the health plan coverage of similar current employees; if employee benefits change COBRA coverage changes. Employers are required to notify employees of their right to coverage when they terminate or some other qualifying event occurs. For others, the expense and impermanent nature of COBRA make for an un-wanted temporary solution, and they find that individual health policies or short term health insurance plans work best. In order to determine if COBRA is right for you, it is important to fully understand what COBRA offers. One you have an understanding of how COBRA works; compare your other options to find what best suits your medical and financial needs. COBRA fees will vary based on the health plan you previously had with your employer. While employed, health insurance is usually subsidized by employers and workers are only responsible for paying a portion of their premium. With a COBRA plan, however, individuals