Cobra Health Plan
Unexpected circumstances often put healthcare coverage at risk. This is why the federal government passed the Consolidated Omnibus Budget Reconciliation Act (COBRA) to provide health insurance for workers and families making major life changes. In certain circumstances, there are protections provided to ensure those who qualify can maintain a health plan similar to the group benefits they’ve had before.
How to qualify:
When a situation arises, such as being laid off or fired by your employer (with the exception of gross misconduct), you will receive a formal letter notifying you of a 60-day window to claim health insurance benefits under COBRA. The plan is designed to cover people for whom coverage would have continued, meaning the benefit can be extended for the employee, a spouse and dependent children, so long as the original group plan is ongoing. (In the case a business closes, COBRA benefits are unavailable.)
If you were to die or get divorced, your spouse and dependent children would have similar options for continuation coverage. In times of legal separation or divorce, though, it is important that the plan administrator is notified so the covered employee’s former spouse can receive proper documentation as soon as possible.
What to do to receive coverage:
The requirements for getting access to COBRA continuation coverage vary based on the health insurance plan itself. In your Summary Plan Description, you will find the procedures to file a claim for your company’s group benefits provider. If you have questions, reach out to the plan administrator.
Be aware it is possible the claim can be denied. In the event you are initially turned away, you will receive a letter describing any other information required and rules for presenting an appeal.
How long it will last:
COBRA will pick up on the day benefits are lost and continue for up to 18 months, depending upon the original group plan and other circumstances – premiums being paid on time or the covered employee reaching Medicare age, for example. The maximums are specified by federal law, but companies can offer longer-term plans if they choose to. Former spouses, in some cases, can receive benefits for up to 36 months after electing to receive COBRA continuation care.
What it costs:
In very basic terms, COBRA premiums are the combination of employee and employer contributions under the group plan with an additional fee. The law freezes the payment amount at 102% of this number to include administrative costs, so pricing will vary based on the policy in place.
Whatever the amount, the beneficiary is entirely responsible for it, including any retroactive payments if there is a gap between when your coverage ends and when you decide to take advantage of COBRA continuation benefits. (Some companies will pay a portion of these expenses, but they are not required to do so.)
Keep in mind that COBRA benefits are merely an option. If you’re able to find coverage through a new employer or private company within the 60-day window you will have to file a claim for benefits, you may be able to get by without it.