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Consolidated Omnibus Budget Reconciliation Act (COBRA)

Friday, May 18th, 2012

COBRAInsuranceBenefits.org is a leading website dedicated to providing consumers with the information they need to understand the COBRA insurance law so that they can make smart decisions to protect themselves and their families. At COBRAInsuranceBenefits.org, people can find easy to understand information about COBRA eligibility, signing up for COBRA insurance, the advantages and disadvantages of COBRA insurance, state sponsored COBRA programs (including Mini-COBRA and COBRA continuation), as well as alternatives to COBRA insurance.

COBRA insurance refers to a law passed by Congress in 1986 to ensure that people who experience job loss or a reduction in hours can continue their group health insurance plan for a specified time period. The government passed this law to ensure that people could maintain health care coverage after job loss and not experience lapses in coverage that would make health care out of reach while someone sought out alternate employment. For many people COBRA insurance is a great way to maintain coverage without any interruption, however depending on your age, gender, and health, there may be less expensive COBRA alternatives. These COBRA insurance alternatives can be as much as $10,000 cheaper than COBRA.

COBRA insurance eligibility is based on meeting three key requirements: type of health insurance plan, qualifying event, and qualifying beneficiaries. In order to qualify for COBRA medical insurance you must meet all three qualifications. First, your company must have a health insurance plan that covers at least 20 full time employees. Secondly, your must have what the law calls a qualifying event. This refers to the way that you lost your health care coverage and generally refers to voluntarily or involuntarily termination. As long as you are not losing employment due to gross misconduct, you likely qualify for COBRA insurance. Finally, the third requirement references who is eligible for COBRA insurance coverage. In most cases, the former employee, spouse, and any dependent child will be eligible for COBRA insurance.

The normal COBRA insurance plan lasts for 18 months from the date of job loss and costs 102% of the premium under the federal law. In order to sign up for COBRA you must complete an election form that must be provided by your employer within 14 days of finding out you are losing your job. From there, you have 60 days to decide if you would like to elect COBRA insurance coverage, complete the election form, and pay the initial premium. The COBRA insurance coverage will be retroactive from the day you would have lost medical insurance coverage.

If you find out that you do not qualify for COBRA insurance under the federal law, many states have created expanded COBRA laws, often called Mini COBRA insurance laws or COBRA Insurance Continuation Laws. These laws typically expand coverage to people who worked at companies with between 2-19 employees and in some cases extend coverage past the 18 month mark. However, these plans may cost more than federal COBRA insurance and average between 102% and 150% of the premium.

Furthermore, if you do not qualify for COBRA health insurance or the COBRA insurance premiums are not affordable, there are also many COBRA insurance alternatives that you can consider. The primary insurance plans that people consider as COBRA insurance alternatives are individual health insurance plans, private family health insurance plans, catastrophic health insurance, short term health insurance, and high deductible health insurance. All of these COBRA insurance alternatives may offer less expensive premiums however the level of care is likely to be different than your previous care.

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