Cobra Insurance Rules

Cobra insurance is a government-mandated program that allows employees to continue their health insurance coverage after leaving their job. In this article, we will discuss the rules that govern Cobra insurance.

What is Cobra Insurance?

Cobra insurance, also known as the Consolidated Omnibus Budget Reconciliation Act, was introduced in 1985. This federal law requires employers with 20 or more employees to offer continuation coverage to employees and their family members who lose their health insurance due to certain events, such as job loss, reduction in work hours, or divorce.

The purpose of Cobra insurance is to ensure that individuals and their families have access to health insurance coverage, even if they experience a life-changing event that could affect their access to health care.

Who is Eligible for Cobra Insurance?

To be eligible for Cobra insurance, employees must have been covered by their employer’s health insurance plan on the day before the qualifying event occurred. Cobra coverage is also available to the employee’s spouse and dependent children who were covered by the plan on the day before the qualifying event.

The qualifying events that make an employee eligible for Cobra insurance include:

How Much Does Cobra Insurance Cost?

The cost of Cobra insurance is typically higher than what the employee paid while they were employed, as the employer is no longer contributing to the cost of the plan. Additionally, employers may add a 2% administrative fee to the cost of the plan.

However, Cobra insurance is often less expensive than purchasing an individual health insurance plan. The cost of Cobra varies depending on the employer’s plan, but it cannot exceed 102% of the total cost of the plan.

How Long Does Cobra Insurance Last?

The length of time that Cobra insurance lasts depends on the qualifying event that made the employee eligible for coverage. In most cases, Cobra coverage lasts for up to 18 months. However, some qualifying events, such as divorce or legal separation, can extend coverage for up to 36 months.

What Happens When Cobra Coverage Ends?

When Cobra coverage ends, individuals must find another health insurance plan to continue their coverage. If they do not have another plan in place, they may be subject to a penalty under the Affordable Care Act.

Are There Alternatives to Cobra Insurance?

There are alternative health insurance plans available to individuals who do not qualify for Cobra coverage or who cannot afford the cost of Cobra insurance. These plans include individual health insurance plans, short-term health insurance plans, and health savings accounts. It is important to research these options and find a plan that fits your needs and budget.

FAQ

What is a Qualifying Event?

A qualifying event is an event that makes an employee eligible for Cobra insurance. The most common qualifying events include job loss, reduction in work hours, and divorce or legal separation.

Can I Change Insurance Plans While on Cobra Coverage?

It is possible to change insurance plans while on Cobra coverage, but it is important to research your options and find a plan that fits your needs and budget. You cannot enroll in a new plan outside of the open enrollment period, so it is important to plan ahead and make a decision before your Cobra coverage ends.

Can I Keep Cobra Coverage If I Get a New Job?

If you get a new job that offers health insurance coverage, you may no longer be eligible for Cobra coverage. However, if your new job does not offer health insurance coverage or if there is a waiting period before you can enroll in the plan, you may be eligible to continue your Cobra coverage until you can enroll in your new employer’s plan.

What Happens If I Miss a Cobra Payment?

If you miss a Cobra payment, your coverage will be terminated. It is important to make your payments on time to avoid a lapse in coverage. If you are having trouble making your payments, you should contact your employer or the insurance company to discuss your options.

Can I Enroll in Cobra Coverage If I Declined Coverage When I Was Employed?

No, you cannot enroll in Cobra coverage if you declined coverage when you were employed. To be eligible for Cobra coverage, you must have been covered by your employer’s health insurance plan on the day before the qualifying event occurred.