Cobra Health Insurance

Learning About Cobra Health Insurance

In 1985, Congress enacted the Consolidated Omnibus Budget Reconciliation Act known more commonly as Cobra health insurance. This legislation provides certain employees and their family members with the right to stay enrolled in a group health insurance plan even when individuals have work or life changes. Cobra health insurance is an extension of an employer's group plan made available at a cost to individuals to help provide an insurance safety net.

How Cobra Health Insurance Works

Let's say you lose your job and there is no job on the horizon. What can you do? Are you forced to go without coverage or pay extreme premiums? Not necessarily. If you worked for an employer of 20 or more workers, or were employed by the state or federal government then you may be eligible to stay enrolled in your group plan under the protection offered by the Cobra health insurance program. In some states, you may also be eligible even if your employer had fewer than 20 workers. One qualification for Cobra coverage is that you must have been enrolled in the group plan for the prior 18 months. Your spouse or dependent child may also be eligible if there is a divorce, legal separation, death or if your child no longer qualifies as a dependent.

Costs Related to Cobra Health Insurance

Typically under an employer's group plan, the employer pays all or most of the premiums. When you place the group plan under Cobra, you pay the full premium. In addition to paying the premium, you may be charged a fee of up to 2% for the administrative cost of implementing the Cobra health insurance plan.

Enrollment with Cobra Health Insurance

Employers are required to inform eligible employees of their right to Cobra health insurance. Once enrolled, you may be eligible for Cobra health insurance for anywhere from 18-36 months depending on your circumstances. Cobra health insurance can be costly as you will be maintaining a comprehensive plan but you are always able to shop for an individual plan if you so choose. Even if you decide not to use your Cobra health insurance benefit, knowing about Cobra is a vital part of your insurance safety net.

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