COBRA health plans or COBRA Insurance protect workers who are between jobs.
All COBRA Health Plans or COBRA Insurance are based on the 1985 federal legislation that requires employers with more than twenty employees to offer any employee leaving the company the option to continue their health insurance in the company health plan for eighteen to thirty-six months. The employer continues to pay for the COBRA health plan and the employee is required to reimburse the employer for the cost of the insurance. There is usually a two percent administrative fee added to the total cost for the former employee.
Even though the former employer is paying a group rate for the COBRA health plan that allows you to pay this same group rate after you have left the company, COBRA health insurance plans are still likely not an affordable health plan… Most likely expensive. You may be able to save substantial money by exploring individual and family health insurance plans elsewhere.
It is a good time to continue on with your employer health plan under COBRA if any of the following situations applies to you:
* You have very comprehensive health plan benefits and can comfortably absorb the extra cost.
* You have had recent health problems that you need continued coverage for.
* You have had chronic or continual health problems or have a pre-existing condition.
* You are required to take expensive prescription medications.
* You have been declined for a health insurance plan recently.
You should consider an alternative to your COBRA Health Plan if any of the following are true:
* you want continual health insurance coverage but at a lower cost and
* you have not had any significant chronic health problems and
* you have not received any recommendations from physicians or healthcare workers to undergo a medical procedure in the near future.
Individual health insurance plans and family health insurance options are usually less expensive than COBRA health plans because they generally reward people who are in overall good health and who live healthy lifestyles.
The COBRA premium amounts can’t be more than 102 percent of the cost to the plan, including up to 2 percent of administrative expenses. The initial premium payment must be made within forty-five days of the date of the COBRA election. You must send in your payment for successive periods of coverage prior to the date which is stated in the plan. There is a minimum 30-day grace period, which is the ideal time to do comparison shopping for you and your family.
If COBRA insurance plan premiums are not paid by the first day of the period of coverage, the plan reserves the right to cancel coverage until payment is received. Then coverage is reinstated retroactively to the beginning of the period so there is no break in coverage.
If your employer has gone out of business or declared bankruptcy and there is no longer a health plan, unfortunately no COBRA coverage will be available. If another plan is offered by the company, however, you might be covered under that plan.
Employers or health plan administrators must provide you with a general notice letting you know that you are entitled to COBRA benefits. Most of us receive an initial notice about COBRA coverage when first hired. When you are no longer eligible for health coverage, your employer must provide you with an additional specific notice summarizing your rights to COBRA benefits.
Employers must notify the health plan administrator within thirty days after an employee’s termination or after a reduction in hours that causes an employee to lose health benefits. The plan administrator then must provide notice to individual employees of their right to elect COBRA health plan coverage within fourteen days.
If an employee does not respond to the notice and elect COBRA health plan coverage by day sixty after the written notice is sent, the employee loses all rights to COBRA benefits.
Spouses and dependent children who are covered under your health insurance plan have an independent right to elect COBRA health plan coverage upon termination or reduction in your hours. For example, if you have a family member with an illness at the time you are laid off, that person can independently elect COBRA coverage.
It is in your best interests to take the time to consider your options for health care coverage when a change in employment is on the horizon. It is reassuring to know that you will be able to elect to stay with your COBRA Health Plan in the future.
Take advantage of the built-in cushion of time to investigate all your insurance options if you find you are going to be losing your job-related health insurance coverage. Much information can be gathered from the internet or by calling local and national insurance providers. More and more large insurance companies are designing more affordable health insurance plans for displaced workers and job seekers. It is definitely worth your time to shop around for low cost health coverage. It is not necessary to automatically jump into a COBRA plan, although this is the tendency. The more time you spend researching your options, the better off you and your family will be. Ultimately finding a low cost health plan that meets your insurance and budget needs.
