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COBRA Continuation Coverage, Explained.

COBRA is often thought of as the expensive health insurance alternative. That’s not always the case.

How COBRA Health Insurance Works

COBRA, which stands for Consolidated OmniBus Reconciliation Act, allows for a continuation in coverage in relation to an employee’s employer-sponsored health insurance plan even after the employee leaves their job. The health plan is guaranteed regardless of whether the employee left the job voluntarily or not, or if the employee was forced to leave by life certain life experiences.

However, COBRA should not be misinterpreted as a health insurance plan. It is more of a law that converts a group insurance plan into an individual one. Thanks to COBRA regulations, most employers with an excess of 20 employees offer coverage, with the exemption of churches and the federal government. 

What you need to know is that getting the COBRA plan is a little different from getting a plan through your employer since while using the former; you have to cover the full cost of the plan.

How do I Know That I Qualify for the COBRA Plan?

To establish whether your group insurance plan is eligible for COBRA coverage, start by checking at the group’s plan Summary Plan Description. This document is available approximately 90 days after you join the plan. To get cobra insurance, you need to have qualifying events that lead to the loss of your health insurance. The main qualifying event for COBRA coverage is leaving or quitting your job provided that the reasons for leaving are not as a result of gross misconduct. The list below outlines the common cobra qualifying events for COBRA coverage.

  • When you leave or quit your job
  • Termination of your job posting for reasons other than gross misconduct
  • A reduction of your working hours
  • When you lose coverage as a result of being entitled to receive Medicare
  • Divorce or separation from your legal spouse

In the event that your spouse or dependent children lose their coverage from your plan as a result of a legal separation or your death, they are still entitled to COBRA coverage. The same happens for children who are on their parents’ insurance but lose their coverage once they turn 26. Such a child is still a cobra qualified beneficiary.

How Much Does COBRA Cost?

The cost of COBRA coverage is such that you have to pay the full amount of your health insurance plan as well as a 2% administrative cost. This means that COBRA coverage may be more expensive and the expense can even go higher should you consider the plan as a short-term option. In most cases, employers tend to subsidize health insurance cost for their employees. If you find that your health insurance is affordable, it may be that your employer is helping you cover part of the cost (although our agents can help you find affordable options otherwise). This means that before subscribing to cobra health insurance, ensure that you know how much the full cost of your health insurance plan is.

Some employees are eligible for getting assistance to meet their COBRA cost. Those who do qualify for health coverage tax credit. Such employees include those whose employment is terminated as a result of global trade. There are also workers who are entitled to benefits under the Trade Adjustment Assistance (TAA), and some employees who are entitled to pension payments under the Pension Benefit Guaranty Corporation (PBGC).

Is Cobra a Good Alternative?

While COBRA is a good option to retain your employer-sponsored health insurance in the event that you lose your job, make sure that you explore all alternatives before choosing the plan. Our experts can help you find more affordable plans that can suit both individual and family needs. We’d be happy to work with you, just fill out the form below and we’ll get in touch.

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Photo by Tima Miroshnichenko from Pexels

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