We can all count on ten things. What are they, you ask? Your fingers…haha! I crack myself up. But – on to the serious focus of my blog today.
Unfortunately, something you can’t necessarily count on is employer-sponsored health insurance. Why? Because you can lose your coverage if you lose your job, have your hours reduced, or get divorced and had your insurance through your former spouse’s job.
That’s where COBRA continuation coverage comes in. Also known as the Consolidated Omnibus Budget Reconciliation Act, COBRA is an insurance safety net for American workers who experience a qualifying event. COBRA can be hard to understand, but I’m here to help explain it. Read on for my top 5 COBRA need-to-knows.
COBRA lets you continue all of the group health coverage that you had, but you take on the total premium cost. That means you pay the portion of the total premium that you used to pay before the qualifying event, plus the part that the employer used to pay, plus a small administrative fee of up to 2%.
You may not realize it, but many employers pay a big chunk of the insurance company’s total premium for employee coverage, sometimes more than half. Because of that, COBRA premiums can be more than double what you used to pay.
For some people, that isn’t financially feasible. But you have some choices.
Under COBRA you can keep all of the group healthcare coverage that you had before the qualifying event, whether that’s medical coverage, dental coverage, or vision coverage.
If you can’t afford to do that, you have the option of continuing only some of the coverage in order to lower your total monthly cost. For example, you can keep only your medical insurance, or only your vision and dental insurance.
Another option if you had family coverage is to keep coverage only for certain family members. You can continue coverage for yourself and your children, for example, with your spouse getting coverage from their own employer. Or you can switch to “employee only” coverage, with other family members picking up coverage from your spouse’s employer or elsewhere.
If none of the COBRA options work for you, you may be able to obtain health coverage elsewhere. The Affordable Care Act (ACA) created the health insurance marketplace, which offers a variety of individual and family plans. Financial assistance may be available depending on income status.
Your employer has to give you at least 60 days to choose or decline COBRA continuation. During that time, you can drop coverage, then change your mind, as long as you let your employer know within the 60-day window. If you choose COBRA, your coverage begins the day you elect continuation.
It’s also important to know that COBRA coverage lasts for a maximum of 18 months. But certain circumstances create eligibility for an 18-month extension, bringing the total to 36 months.
Medicare enrollees generally lose employer-sponsored group health coverage. However, spouses and children not eligible for Medicare can continue their coverage under COBRA. Again, employees are responsible for the full payment.
Visit the US Department of Labor’s website for information on COBRA.
I hope you’ve enjoyed my top 5 COBRA need-to-knows. Of course, you can always count on me for information. But if you’d like to learn even more, check out my video!