COBRA: It's Not A Snake, It's Health Insurance!

Almost every week we receive calls from friends and new clients that have left their jobs and are provided information about COBRA. In this post we want to share some information about COBRA and make sure you can make a great decision about your health insurance coverage.

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, but 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.

COBRA subsidies and extensions - what are they and how do you get them?
During the great recession the Congress and Administration attempted to assist laid off workers by supplying them with additional time under COBRA and also monetary assistance to pay up to 67% of their COBRA costs. The COBRA assistance has been extended several times however recently in July of this year did not receive an extension. If you have been receiving a COBRA subsidy, please make sure to speak with your former HR department and look at all material provided to you from the insurance company to ensure that you are aware if the benefits will terminate or if your portion of costs will increase.

Interested in learning more about your individual and family health insurance choices?
Click here for a health insurance quote today.

Jason Bohmann – 713-422-2935