COBRA
The Consolidated
Omnibus Budget Reconciliation Act of 1985 (better known as “COBRA”)
states that every employer with 20 or more employees (during at least 50%
of the prior year) must provide a health coverage continuation option to all
covered employees and their covered dependents for up to 18 months in the
event of:
A
. Voluntary or involuntary termination of the covered employee’s
employment, except in cases where the employee has been found to have committed
“gross misconduct” (some sources also refer to this as “terminated
with cause”)
B . Reduction in the number of hours of employment, when
that reduction results in a change of status from an eligible, full time employee
(30+ hours per week) to a non-eligible, part time employee (less than 30 hours
per week)
C . A Chapter 11 bankruptcy filing by the employer, if the
employee is over age 65
In simple
English, if you lose or quit your job, COBRA allows you the option of continuing
your health insurance coverage at your own expense. COBRA does not apply to
the Federal Government and certain church-related organizations. If you are
or were employed by a company with less than 20 employees, please contact
your state’s Department of Insurance for more information.
How Long Does COBRA Last?
-
Basic
COBRA coverage lasts up to 18 months, however, the employee may decided
to discontinue their coverage at any time. Other causes of discontinuation
are listed below.
-
Coverage
may last up to 29 months if an individual qualifies for Social Security
disability benefits
-
Coverage
may continue for dependents up to 36 months with certain qualifying events,
including:
-
Death
of the insured employee
-
Divorce
or legal separation
-
Employee’s
entitlement to Medicare benefits
-
Loss
of dependent status
How Do I Sign Up For COBRA Coverage?
-
If you
are entitled to COBRA benefits, your health plan must provide you with a
notice stating your right to choose to continue the benefits provided by
the plan. Your former employer is responsible for notifying the insurance
provider of your eligibility for COBRA coverage.
-
You
have 60 days to accept this coverage. If you do not act within 60 days,
you will lose all rights to these benefits.
Who Pays for COBRA Coverage?
-
In general,
you do. In fact, employers have the right to require a former employee or
their surviving spouse to pay up to 102% of their premium. However, this
is typically still less expensive than paying for an individual policy.
-
In addition,
if you are disabled at the time of termination, your premiums may be increased
after the 18th month of continued coverage up to 150% of your premium at
the time of termination.
Is There Anything That Would Cause Me To Lose My COBRA Coverage?
-
If you
fail to notify your former employer within 60 days that you would like to
continue your coverage, you will no longer be eligible for benefits
-
If you
do not make your premium payments when they are due (or within the 30-day
grace period), you will lose your coverage
-
If your
employer ceases to maintain any group health coverage (goes out of business,
declares bankruptcy, cancels health coverage for all of its current employees,
etc.) you will lose your coverage
-
If you
become eligible for Medicare benefits, you will no longer be eligible for
COBRA coverage. However, your dependents will still be covered by COBRA
for the remainder of the term
-
If you
qualify for a new group health plan (like through a new job), you will no
longer be eligible for COBRA benefits. This is the case even when the new
coverage is not as good as your previous employer’s plan
-
If you
choose to convert to an individual health plan, you will lose your COBRA
benefits
For more
information on COBRA eligibility and coverage, we recommend contacting your
former employer’s human recourses department or your state’s Department
of Insurance.
DIGNITYRESOURCES
PO Box 1437 Los Altos, CA 94023 (877) 563-2100 FAX:
425-871-8484 info@dignityresources.com