The Consolidated Omnibus Budget Reconciliation Act or COBRA is a health insurance program that allows eligible employees & their dependents the continued benefits of health insurance coverage when they lose their job or experience a reduction of work hours.
In this blog, we will talk about COBRA health insurance and everything related to it.
Take a look!!!
COBRA Continuation Coverage
Large employers in the United States, people with 50 or more full-time employees, are supposed to offer health insurance to their qualifying employees by paying a portion of insurance premiums.
If an employee is ineligible to get an employer’s health insurance benefits—which can happen for numerous reasons (including receiving laid off or falling below a minimum threshold number of hours worked per week)—the employer can stop the payment (certain part) of the employee’s health insurance premiums. In this case, COBRA lets employees and their dependents retain the same health insurance coverage for a fixed period of time.
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Under COBRA, former employees, spouses, former spouses, and dependent children should be provided with the option of continued health insurance coverage at group rates that otherwise can be terminated. While these people are likely to pay more for health insurance coverage via COBRA than they did as employees (as the employer will no longer pay a part of the premium costs), COBRA coverage can be potentially cheap than an individual health insurance plan.
It is important to note that COBRA is a health insurance coverage program that provides coverage to expenses toward prescription drugs, dental treatments, and vision care. Also, life insurance & disability insurance are not included in it.
Benefits of COBRA Health Insurance
For every qualifying candidate, COBRA rules ultimately provide for the offering of coverage, which is identical to that which the employer offers to its current employees.
If there is any change in the plan benefits for active employees, it will also be applied to qualified beneficiaries. Every qualifying COBRA beneficiary should be permitted to make the same choices as non-COBRA beneficiaries. Necessarily, the insurance coverage for both current employees, as well as beneficiaries, are exactly the same for ex-employees & beneficiaries under COBRA.
An individual should be given a minimum of 60 days to pick whether or not to choose continuation coverage. No matter the person waive coverage, he or she can transform his/her mind if it is within the 60-day election period.
From the date of the qualifying event, COBRA coverage automatically extends for a limited period of 18 or 36 months, based on the applicable scenarios.
One can qualify to extend the 18-month maximum period of continuation coverage if any one of the qualified beneficiaries in the family is disabled as well as meets certain requirements. Or if a second qualifying event happened—potentially such as a death of a covered employee, the legal separation of a covered employee and spouse, a covered employee’s becoming entitled to Medicare or a loss of dependent child status under the program.
Cost Of COBRA Health Insurance
The word “group rate” can be incorrectly perceived as a discount offer, however, in reality, it usually turns out to be comparatively out-of-pocket.
During the employment period, employers often pay a significant portion of the actual health insurance premium (for instance, an employer can pay 80 percent of premium costs), while the employee pays the remainder.
After employment, the person is supposed to pay the entire premium, and at times it can be topped up with an extra 2 percent toward administrative charges. Expenses do not exceed 102 percent of the total cost for the plan for employees who have not experienced a qualifying event.
Hence, in spite of the group rates being available for the COBRA continued plan in the post-employment period, the expense to the ex-employee can increase notably when compared to prior insurance expenses.
Basically, the expense remains the same but has to be carried completely by the person with zero contribution from the employer. COBRA can still be less expensive than various other individual health coverage plans.
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Applying For COBRA Coverage
In order to start COBRA coverage, you should confirm that you are eligible. Normally, an eligible person will acquire a letter from either the employer or a health insurer outlining COBRA benefits.
Many find this notification complex to grasp because it includes numerous legal information & language. So, if you struggle to determine your eligibility for COBRA or how to start coverage through this program, then you can reach out to either the health insurer or your former employer’s HR department.
In a nutshell, COBRA is a convenient option for retaining health insurance if you lose your employer-sponsored health benefits.