COBRA Health Insurance

The Consolidated Omnibus Budget Reconciliation Act of 1985 (COBRA) is a federal law ensuring recently terminated employees, who had health insurance through their employer, will remain covered for 18 months afterwards, and in some cases, up to 36 months. Though many companies who offer group health insurance fall under the COBRA law, it’s important to note that there are exceptions.

When an employee loses his or her job, COBRA is a temporary entitlement that protects him or her from losing health insurance benefits as well. This can be of tremendous help during what is otherwise a difficult time in any person’s life. However, former employees must meet certain qualifications for COBRA to apply to them, meaning some will not benefit from the law. At any rate, employers should be well-versed on the terms of COBRA and should keep their employees informed of their entitlements under the law.

How Does COBRA Work

The way COBRA works is actually very simple. If a terminated employee and his or her family were covered under the employer’s group health insurance, COBRA allows him or her to purchase health coverage for his or her family at the group rate, as if still employed. This can mean significant cost savings, even though this former employee will be expected to pay the full premium plus a two-percent surcharge.

COBRA can also apply to current employees whose access to health insurance coverage has suffered due to a change in status. For instance, if hours are reduced or the employee divorces an employer-insured spouse, COBRA will allow the employee to keep the group health insurance plan for up to the allotted 18 months or until he or she finds another group plan or purchases individual health insurance coverage.

COBRA Health Insurance Coverage

During the period of health coverage protected by COBRA, health benefits do not differ from the original group plan. Under COBRA, the health insurance plan a qualified applicant receives is going to be identical to that offered by the employer. The only change is the shift in responsibility for making monthly premium payments: from the employer to the terminated employee. The only way the benefits provided to a former employee might change under COBRA is if the employer makes changes to the group policy for current employees.

COBRA Is Temporary Health Insurance

The most important thing to remember about COBRA is that it is temporary. It is not meant to be a permanent solution for healthcare coverage beyond employment, so it is the terminated employee’s responsibility to arrange some form of health insurance coverage to take effect after the COBRA protection period expires.

Because any policy covered by COBRA is specifically short-term, if someone covered by such a plan becomes ill, once the period is up, this person may find it difficult to acquire quality health insurance coverage elsewhere due to the pre-existing condition. In relying upon COBRA to extend coverage in the case someone loses his or her job, he or she is at risk for being uninsurable once it comes time to purchase individual health insurance.

Free Health Insurance Quotes

Fortunately, health insurance is a competitive market. To quickly and easily research the top health insurance companies in your area and the plans they offer, enter your zip code to compare health insurance quotes and find COBRA health insurance or the type of policy – individual, family, group, or self-employed – that is best for you.