COBRA Medical Coverage - What's In It for You?

2007-10-15 12:53:47

( Health )



What is COBRA?

COBRA stands for Consolidated Omnibus Budget Reconciliatory Act, and is a major labor legislation enabling employees to continue their medical coverage even after leaving their jobs. The same benefit is extended to the dependents of ex-employees who were also enrolled in the plans prior to the termination. Maximum coverage period is 18 months.

As an ex-employee, you don't need to cancel your health care coverage when you resign or leave a job either voluntarily or involuntarily. The health insurance benefits you have been enjoying will continue as long as you pay the full amount of your monthly premiums promptly.

The Nature of COBRA Medical Coverage

COBRA costs may come as a shock to you because you had been paying only a fraction of your health insurance premiums when you were still actively employed. It's because your ex-employer will no longer subsidize your health care insurance costs, so you need to shoulder them on your own.

However, it would be to your best interest to use the COBRA medical option especially if you cannot find another job immediately, or if you already have an existing medical condition for which you need insurance coverage. You will also want to consider COBRA medical coverage if your family has been dependent on your health care insurance plan before you lost your job.

COBRA medical coverage is intended to be only a temporary solution, for as long as you are going through a period of unemployment. Depending on the policies of your ex-employer, you may forfeit COBRA medical coverage if you move to another location. And of course, the COBRA plan becomes void when you get a new job.

Extents and Limitations of Business Responsibility for COBRA Medical Coverage

Companies with 20 or fewer employees are exempt from COBRA requirements and are not required to offer this option to their ex-employees. Ex-employees must have worked for at least half of the taxable year in order to be eligible for COBRA medical coverage.

Qualified beneficiaries include all employees and their dependents who were covered under the company's group insurance plan.

Qualifying events include all cases of voluntary or involuntary termination, unless the termination was due to the employee's gross misconduct. A covered spouse or dependent child may also qualify for COBRA in the event of divorce or separation, or when the covered employee passes away.

How to Elect COBRA Medical Coverage

You need to notify your company's human resources or benefits administration department of your desire to continue COBRA health insurance within thirty days of your termination date.

If you are prompt in filing for the coverage, your COBRA medical coverage will commence just at the first day of your unemployment.

You need to realize that COBRA health coverage is only for a temporary basis and will cease after 18 months, unless you have a compelling reason to extend it. During your COBRA coverage period, you have to be prompt in paying premiums so as not to risk cancellation of your health insurance.


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