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Step by Step Guide to COBRA Insurance:
Your "how to" guide for the COBRA insurance process.
COBRA is a law that requires many businesses to offer the continuation of health care insurance to employees and their beneficiaries after job loss, retirement, quitting, or another qualifying event. However for most people thinking about enrolling in COBRA insurance, as well as how to research alternatives, can be a confusing process. Use our simple and easy to understand step by step guide to COBRA insurance to help you make the best decision for you and your family about COBRA insurance and it's alternatives. It will help you find the right health insurance plan for you and ensure your plan meets your family's budget and health care needs.
Ensure you receive a COBRA election notice from your employer.
Your employer is required to provide you with a COBRA insurance election form at the time that you are no longer eligible for their insurance plan due to job loss or a reduction in hours. However, they have 14 days to do so, so it is wise to ask for the election form as soon as possible. This form will contain all the vital information you need to continue coverage.
There are specific requirements to qualify for COBRA insurance.
These requirements fall under 3 categories: Type of Insurance Plan, Qualifying event (i.e. why you are losing coverage), and Qualifying Beneficiaries (i.e. who is eligible for coverage.) You must meet all requirements to receive COBRA insurance. Learn more about the requirements here.
If you do not qualify for under the federal COBRA insurance law, determine if you qualify under your state COBRA law.
If you do not qualify for under the federal COBRA insurance law, your state may have a Mini COBRA law or expanded COBRA insurance coverage that you may qualify for. Check to see if you are covered under these laws. Learn about your state COBRA laws here.
Understand the costs associated with electing COBRA coverage.
COBRA insurance costs are based on the current monthly premium that your insurance plan costs. Under federal COBRA law, continued coverage will cost 102% of your premium. Under state COBRA laws, this amount varies between 100% and 150%. Learn how to calculate costs here.
Consider COBRA alternatives to lower costs depending on your current health and situation.
There are many alternatives to COBRA insurance that may be significantly less expensive than retaining your current plan under COBRA. On average, COBRA insurance costs a family $13,000 per year while alternative insurance plans start as low as $1200. Learn more about alternative insurance options here.
Consider COBRA insurance in the short term to ensure you are covered while you seek out alternatives.
For many people it can be overwhelming to research alternative insurance providers at the same time they are dealing with job loss. You may drop COBRA insurance coverage at any point, which means that you can keep coverage in the short term by electing COBRA coverage and drop it at a later time when you find a more affordable plan better suited to your needs. Learn more about alternative insurance options here.
Consider each family member independently and their specific health needs and situation.
Depending on the specific health needs of your family, it may make sense to continue COBRA insurance benefits for some family members while obtaining alternate insurance for others. For example, if you covered employee has significant pre-existing health conditions, but all other family members are healthy, the most economical option may be to continue COBRA insurance for the less healthy person under COBRA and find an alternative insurance provider for the rest of the family. Learn more about alternative insurance options here.
Sign up for COBRA insurance or an alternate health insurance plan.
It is incredibly important to ensure that you and your family are protected with health insurance and do not experience a lapse in coverage. If you elect to stay covered under COBRA insurance, then you will have 60 days to elect coverage by submitting the election form and paying the initial premium. This coverage will extend back the day that you lost group health insurance. If you elect for alternatives to COBRA, you will want to follow their guidelines to ensure you are covered.