Contrary to popular belief, COBRA is not a type of insurance company for former employees or retirees, but in fact, it is a federally mandated law. Passed in 1986, the Consolidated Omnibus Budget Reconciliation Act, also known as COBRA, gives certain individuals who qualify, the right to temporarily continue the group insurance policy they previously held. COBRA insurance allows past employees the ability to continue health coverage under the group discount rates.
Unfortunately, life insurance is not covered under the COBRA plan, but qualifying individuals may be entitled to dental and vision, prescriptions and even inpatient and outpatient hospital care.
While many companies pay for a portion of the group health care, one stipulation of COBRA insurance is that the individual covered must pay in full for their coverage. Usually this is more expensive than what they paid toward their employer sponsored group policy while they were employed. However, the policy will still at a better group rate than if the individual were to get insurance coverage on their own.
Family and dependents are also covered under the COBRA law. If your group insurance plan covered your family while you were employed, they will receive the same benefits if you continue coverage under COBRA.
One of the biggest benefits to COBRA insurance is that it provides much needed protection to those with pre-existing health conditions. When you take advantage of continuing coverage under COBRA, you are under the same policy you were with during your employment. If you choose not to continue your coverage under the COBRA plan, and are without insurance coverage for more than 63 days, you will not be covered for pre-existing conditions when you go to buy an individual policy. The COBRA plan ensures that you are continually covered until you switch to an individual plan, keeping out of the ‘pre-existing conditions’ nightmare.
COBRA benefits usually continue for eighteen months after initially signing up to use COBRA. There are options to extend this amount of time with certain qualifications, which must be met. Electing COBRA insurance also helps if you have a relationship with a specific doctor that you would like to continue. Nothing changes while you are under the COBRA plan.
Time is of the essence when leaving a group health plan and opting for individual coverage. COBRA has an eighteen-month time frame which should allow most people time to find an adequate individual plan. It’s wise to use this time to price multiple individual health insurance plans which provide access to the doctors and clinics that are preferable.
If you do choose to accept COBRA coverage, you have 60 days to file the notice. After you have accepted the COBRA insurance, you then have 45 days to make the first payment into the plan. Many previous employers will follow up by the 44th day to make sure you did not forget about the option to elect coverage under the COBRA law.
If you have recently lost your job or are concerned that your employer may be downsizing, COBRA insurance is definitely an important program to research. Signing on with COBRA will ensure that any pre-existing conditions are covered once you leave COBRA for an individual policy. Taking full advantage of COBRA is well worth the cost just to provide peace of mind for you and your family.