Most Americans receive health insurance through their employers, meaning that once out of work, coverage can pose a problem. In 1986, Congress passed the Consolidated Budget Reconciliation Act (COBRA). This law allows for the continuation of health care coverage in instances where a recipient normally would have lost it. The law only allows this coverage in certain instances.
Basics
The basic workings of COBRA allow participants to continue receiving health insurance coverage at group rates after an event that terminates regular coverage. The employer no longer contributes to coverage, so it will cost more but usually still less than if a participant sought individual coverage.
Qualifying Factors
Plans that qualify to offer COBRA coverage include those that covered at least 20 employees for at least 50 percent of business days in the previous year. A participant must have been covered the day before the qualifying event, and this includes the employee, spouse or dependent children. Children born or adopted during the COBRA period also qualify. Qualifying events include but are not limited to quitting or getting fired from a job (gross misconduct nullifies this), reduction in hours, divorce or separation from covered employee and death of spouse or parent who received coverage.
Electing Coverage
Employers have the responsibility of notifying plan administrators within 30 days when a qualifying event occurs. In the event of a divorce or separation or lost coverage for a dependent child, the qualifying beneficiary must notify the administrator within two months of the event. Once notified, the plan administrator has two weeks to notify the employer or other beneficiary information on begin coverage. Qualified people have 60 days to choose coverage once notified. Once a participant elects coverage, she has 45 days to pay the first premium.
Coverage Length
In most cases, a participant can receive health insurance benefits under this plan for up to 18 months. In some instances, the plan can extend to up to three years. An individual company can elect to provide coverage longer than COBRA limits. In certain instances, a participant can lose coverage. Examples include failure to pay premiums, qualifying for Medicare while under COBRA, employee cancellation of group health plan, starting a health insurance plan under a new employer that does not restrict coverage for pre-existing conditions.
Conversion
If the carrier offers individual insurance plans, it must offer this option to COBRA participants within the six month period before COBRA coverage ends. The company does not have to do this if the person ends COBRA coverage before she reaches the maximum length of her policy.
Tags: health insurance, COBRA coverage, certain instances, divorce separation, qualifying event, receive health
