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COBRA Health Insurance

 

Are you eligible for COBRA health insurance? COBRA, the consolidated omnibus budget reconciliation act, is the act under which employees and their family may choose to continue their health benefit plans under give circumstances. Its details are given below.

 

What Is COBRA?

 

COBRA, the consolidated omnibus budget reconciliation act, provides employees and their family members who lose health insurance benefits due to job loss, shifting from full-time employment to part-time, time gap between job changes, death, divorce etc an opportunity to continue group health insurance benefits. However, this opportunity comes at a cost that means the eligible and interested people have to pay the premium for upto 102 percent of the cost of the plan.

 

COBRA requires that employees with atleast 20 employees in the previous year may offer employees and their dependents (Family) the opportunity to extend the health insurance coverage for a temporary basis for a short duration at a time where coverage under the plan would otherwise cease to exist. The act also requires that the employers and the plans give notices in this regard.

 

What Causes COBRA To Be So Expensive?

 

COBRA offers the former employees, spouses, retirees and their dependent children the right to temporary continue of benefits at group rates.  However, it is applicable only in case an employee looses the benefits due to certain specific events as mentioned below. The plan for COBRA participants is usually more costly compared to health coverage of active employees. This is due to the fact that, in case of active employees, the employer pays a part of the premium whereas a COBRA has to pay the full premium by self. However, it is less expensive than most of the individual coverage.

 

Eligibility Under COBRA Health Insurance


There are different conditions that should be met in order to be eligible to avail benefits under COBRA health insurance. These conditions have been divided into three groups, which are plan coverage, qualifying events and qualified beneficiaries:

 

Plan Coverage - In order to qualify for the group health plans under COBRA, employers must have twenty or more than twenty employees working for at least fifty percent of its total working days in the last calendar year. In order to be eligible in terms of number of employees, both full time and part time employees are counted. However, each part-time employee is counted as certain fraction of an employees and the fraction is equivalent to the number of hours that any part time employee works divided the number of hours that any full time employee has to work.

 

Qualifying Events – There are certain events in life due to which one has to loose the health insurance benefits. Some of these events are also considered under COBRA benefits. Eligibility and the time period for which the COBRA benefits are to be offered are decided according to the event. The different qualifying events for different categories are given below:

 

Eligible events for Employees:

  • Termination from service (voluntary or involuntary) due to any reason other than gross misconduct.

  • Decrease in number of working hours

 

Eligible Events for Spouses:

 

  • Termination from service (voluntary or involuntary) of the covered employee due to any reason other than gross misconduct.

  • Decrease in number of working hours of the covered employee.

  • Covered employee becomes eligible for Medicare

  • Divorce/legal separation of the covered employee

  • Death of covered employee

 

Eligible Events for Dependent Children:

 

  • Child no longer remains dependent

  • Termination from service (voluntary or involuntary) of the covered employee due to any reason other than gross misconduct.

  • Decrease in number of working hours of the covered employee.

  • Covered employee becomes eligible for Medicare

  • Divorce/legal separation of the covered employee

  • Death of covered employee

 

Qualified Beneficiaries – An individual, who is covered under any group health insurance plan on the day before a qualifying event and is either an employee or employee’s spouse and/or dependent, is considered a qualified beneficiary.


Depending upon the events, retired employees or their spouse and/or dependent may also be considered qualified beneficiary/beneficiaries. Similarly, a child who is born to a beneficiary or adopted by a beneficiary during the COBRA benefits period is also eligible for these benefits. In fact, directors, independent contractors, agents etc who participate in the employer sponsored group health insurance may also qualify for these benefits.

 

Benefits Covered Under COBRA

 

The beneficiaries are entitled to avail the same benefits that they were availing immediately before qualifying for continuation coverage. In terms of the act, qualified individuals must get protection similar to that available to similarly placed beneficiary who is not getting COBRA benefits under the plan. However, any change in the benefits implemented for active employees will also apply to COBRA beneficiary.

 

Cost Of COBRA Coverage

 

At the time employment, employer pays all or part of the group health insurance premium and the remaining part, if any, is paid by the employee. However, under COBRA, a beneficiary has to pay the portion of the premium that he used to pay as an active employee and the amount contributed by the employer i.e. the beneficiary has to pay the entire premium amount. An addition, a 2 % administrative fee may be charged.

 

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