Articles
COBRA
What is COBRA?
COBRA or the Consolidated Omnibus Budget Reconciliation Act (COBRA) was a law
enacted in 1986 with the intent of amending the Employee Retirement Income
Security Act (ERISA). COBRA's purpose was to provide health coverage to employees
and beneficiaries when coverage would otherwise be terminated, also called
a qualifying event.
How do I qualify for COBRA?
A qualifying event could be one of the following; the death of the employee,
termination of employment, divorce or legal separation of a covered employee
and their spouse, the covered employee becomes eligible for Medicare benefits.
How long does COBRA cover my family and why is it so expensive?
COBRA entitles the recipient access to medical benefits. This generally means
that the health plan that the employer provides is made available for up
to 18 months to the terminated employee and his or her family. The medical
benefits made available are generally perceived to be very expensive. The
price of the medical plan is considered high because the employer is no longer
required to make contributions on behalf of the terminated employee or family.
Because the employer does not make contributions, the COBRA recipient must
pay the full cost of the plan.
What companies are required to offer COBRA benefits?
COBRA usually applies to employer sponsored plans or group plans that have
20 or more employees. Some employers are not required to offer COBRA. Employers
that are not required to offer COBRA include the Federal government and also
some church groups.
How long do individuals have to participate in COBRA?
The individual has 60 days to decide whether to elect COBRA continuation coverage.
The person has 45 days after electing coverage to pay the initial premium.
I qualify for COBRA, do I have any alternatives?
You may have the opportunity to choose other health insurance coverage during
this time. An individual or family health insurance plan may be a good option
for your family. You must scrutinize the individual plan and its plan outline
or summary to fully understand the limitations and exclusions of any health
insurance plan you consider.
I'm self employed and I'm almost through the 18 months of COBRA
coverage. What should I do?
You should begin examining health insurance plans immediately. You should apply
for individual coverage immediately to avoid losing health coverage. Underwriting
for medical plans can take up to 4 to 6 weeks. Starting early will allow you
to make informed decisions to protect you and your family.
When should I consider health plans other than COBRA?
- You and your family have no pre-existing conditions and don't
have any medical conditions. In addition, you have never been
advised to have a medical procedure in the future.
- You are not taking any prescription medications.
- You want to reduce your monthly health care costs.
When should I stay with COBRA, even if it is more expensive?
- You are not concerned about paying a bit more
for health benefits and you like having comprehensive
health benefits that may include vision and dental.
- You don't want to potentially change doctors or learn a new
plan.
- You have earned a new position at a new firm and the company
does not offer a group health plan.
- You have developed health problems or have been involved
in an accident during the first 60 days of your qualifying
event.
- You have previous medical problems, are taking medications
currently, or have been advised to complete a medical procedure
in the future.
- You have ever been declined by insurance providers for health,
life, or disability coverage.
- You are currently pregnant or currently planning to have
a child. Most individual plans in Texas do not offer maternity
benefits and will not offer you any coverage if you or your
spouse is pregnant. Do not opt out of COBRA if this applies
to you.
Interested in learning more about your individual and family health
insurance choices?
Click here for a health insurance quote today.
