Understand exactly what COBRA insurance is
COBRA insurance, contrary to popular belief, is actually a piece of legislation that was passed in 1986 by Congress. In the Consolidated Omnibus Budget Reconciliation Act, commonly known as COBRA, the government created a law that requires most companies to allow their employees the option to continue to use their group health insurance plan after their employment ends. This policy was created to ensure that people did not suddenly find themselves without health insurance and responsible for paying medical expenses out of pocket. Under COBRA insurance, most people who lost, quit, or retired from their jobs are eligible to elect to keep their medical insurance, for them and their families/dependents, with COBRA.
So what does the COBRA insurance law really mean for you? It means that eligible employees can keep their group medical insurance. This means you can choose to keep the exact same health insurance plan, normally for up to eighteen months. Under the COBRA law, most people are eligible for COBRA if the worked at a company with 20 or more full time employees and they were not fired for a serious offense, known in the law as gross misconduct. That also means that you can use COBRA insurance coverage is you quit, resign, or retire from your job as well. It covers voluntary and involuntary job loss.
At this point, you may be thinking, that’s great, what’s the catch? Well, you are right to think this. The main difference with COBRA insurance, is that you will have to pay the entire premium yourself. Most employers pay 70%-90% of the cost of health insurance, so this ends up being a considerable expense. Many individuals find that COBRA costs them upwards of $400/month and many families find it costs upwards of $900/month.
One other important thing to know about COBRA insurance coverage is that it extends to anyone who was previously covered under your employer’s plan. That means spouses, children, and other dependents can remain covered. You can also add new people to your plan under COBRA just like you could with your former employer’s plan.
Signing up for COBRA insurance is actually a pretty straight forward process in most cases. Your employer is required by law to provide you with a COBRA insurance election within fourteen days of the end of your health insurance coverage. Once you receive the election form, you will have 60 days to decide whether or not you would like to enroll. To enroll, you simply complete the form with each family member you would like to enroll in COBRA insurance, and send in the enrollment form with a check for the premium amount. This amount can be found on the election form in most cases.
If you are unsure or did not get the COBRA election form, the easiest thing to do is reach out to your former employer and request the form.
For the federal COBRA insurance law, COBRA insurance coverage is usually 18 months. Sometimes this can be extended to thrity-six months due to disability or other extenuating circumstances. With that said, your COBRA insurance coverage can be less than 18 months if any of the following things occur: