Deciding whether to enroll in COBRA insurance or an alternative health insurance plan after losing, quitting, or retiring from your job is a tough decision. While COBRA insurance allows you to keep the exact same plan, many people find that with alternatives they can save up to 65% on the cost of COBRA.
COBRA insurance, or the Consolidated Omnibus Budget Reconciliation Act, was passed by Congress in 1986 to protect employees and their families from unexpectedly being without health insurance after job loss. Contrary to popular belief, COBRA insurance is a law, not an actual insurance plan, and allows people to continue the health insurance plan they had with their employer as long as they meet federal guidelines and pay the entire premium monthly. In most cases, it lasts for 18 months and is meant to help people while they seek out alternate health insurance or another job.
Under COBRA insurance laws there are three main requirements to qualify for COBRA insurance – qualifying plan, qualifying event, and qualifying beneficiaries. The first requirement, qualifying plan refers to the group health insurance plan you had with your former employer. In most cases if your employer has at least 20 full time employees on the insurance plan, you will qualify. The second requirement, qualifying event, refers to how you lost your health insurance. You can be eligible for COBRA health insurance if you lose your job, quit your job, retire from your job, or have your hours reduced; as long as there is no gross misconduct present. The final requirement, qualifying beneficiaries, refers to who else can continue their insurance with COBRA. Under the law, anyone covered under the previous plan is likely eligible including spouses and children. COBRA insurance can also be used by widowed spouses, divorced spouses, and children who lose their dependent status.
COBRA insurance rates vary greatly depending on the cost your health insurance plan. Your COBRA insurance rate will be based on the total cost of your health insurance plan, including any amount your employer paid. You will be responsible for paying the entire COBRA insurance cost, plus a 2% administration fee.COBRA Insurance Enrollment
The enrollment process for COBRA insurance is very easy. All you need to do is complete and submit the election form within 60 days of receiving it. With the election form, you will need to submit the premium payment as well. You should receive the election form within 14 days from your employer.
If you realize that you do not qualify for federal COBRA insurance, there is a chance you qualify for a state COBRA health insurance plan. Many states have created and passed their own legislation to make COBRA continuation available to more people. These programs normally open up COBRA to people who work at smaller companies. In some cases, they extend COBRA medical insurance coverage beyond the 18 months as well.
There are many alternatives to COBRA health insurance that can provide similar care for a much lower price. Anyone considering COBRA medical insurance should always explore alternatives to COBRA including individual plans, catastrophic plans, and short term plans to make sure they find a health insurance plan that works for their health needs and budget.