COBRA Insurance

COBRA insurance is offered under the provisions of the Consolidated Omnibus Budget Reconciliation Act. Passed by Congress in 1986, this legislation provides assistance to people who were covered under a group health insurance company, but lost their jobs.

You may continue your group health insurance coverage if you are unemployed.

About COBRA Insurance

If you worked for a company with 20 or more employees and you have lost your job, you may be able to continue to get health benefits under the employer's group health insurance plan. Except for gross misconduct, the circumstances of the loss of employment are not considered when determining if someone qualifies for coverage under COBRA. A person who has chosen to quit their job can qualify.

Plans Covered Under COBRA

This legislation applies to group health insurance plans offered by private sector employers, as well as those plans which are sponsored by either local or state governments. Plans that are sponsored by the federal government are not covered. Some plans sponsored by churches are also exempt.

Definition of a Group Health Insurance Plan Under COBRA

COBRA insurance coverage includes the following types of health insurance plans:

• A trust
• Health Maintenance Organization (HMO)
• Health Care Spending Accounts
• Reimbursement of health care expenses

Any combination of these plans are considered eligible under COBRA legislation.

How COBRA Works

If you lose your job or have recently retired and you qualify for COBRA insurance, you can continue to participate in your former employer's group health insurance plan. Your spouse and dependent children may also continue their coverage if they were previously covered under the health insurance plan. Newborns and adopted children are considered "qualified beneficiaries" under the legislation.

Getting heath insurance in this way may cost more than you were paying while an active employee since the employer probably paid a portion of the premium on your behalf. To continue coverage, you will need to pay the full amount of the premiums yourself. However, COBRA coverage may cost less than trying to get individual health insurance coverage.

For qualified former employees, benefits under COBRA may continue for:

• A period of up to 18 months for workers (including their spouse and children) who would otherwise not be included in the group plan because their employment was terminated or their work hours cut.
• Up to 29 months if the former employee is determined to be disabled in the first 60 days of receiving health insurance benefits under COBRA.
• Up to 36 months for a spouse or dependent children who are facing the loss of their health insurance under a group insurance plan due to divorce, legal separation or the employee's death.

When You Should Consider COBRA Insurance Coverage

There are some situations where it makes sense to take COBRA insurance coverage when you are in between jobs or have recently retired:

• You want to minimize any gaps in your health insurance coverage.
• You have recently been diagnosed with a health problem.
• You have ongoing health issues.
• You have recently been hired for a new job and your new employer doesn't offer health insurance.
• You are pregnant or planning to become pregnant in the near future.
• You are taking medications regularly.
• You have applied for individual health insuranceand your application was denied.

Making Payments Under a COBRA Plan

If you qualify for COBRA insurance, you have 45 days to start making premium payments. If you don't make your first payment within 45 days, your coverage may be terminated by the health insurance plan administrator. Once you start making premium payments, they are due every month. The payments may be subject to a 30-day grace period.

For more information about COBRA insurance, please visit the Department of Labor web site.

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