Tags: COBRA | Health insurance | unemployment

Today’s ever changing employment landscape has given rise to companies reorganizing and laying off workers at unprecedented numbers.  With unemployment currently estimated at a conservative 10%, Americans in such situations are faced with a key healthcare question:  how do I continue health coverage during my transition to another employment opportunity?  Fortunately, workers have an option:  COBRA. 

The Consolidated Omnibus Budget Reconciliation Act, COBRA, is a law passed in 1985 which stipulates for an insurance program in order for certain employees to continue their health insurance coverage after leaving employment.  In most cases, COBRA allows for 18 month insurance, however in certain cases, coverage can be extended to 29 - 36 months. 

COBRA is applicable when an employee is terminated or laid off and by law, an employer is required to provide COBRA benefits paperwork upon leaving the company.  This provides an employee the option to continue his/her health insurance through COBRA, as well as family coverage.  One of the misconceptions about COBRA is that the employer continues to pay for part of the coverage.  Rather, a terminated employee has the option to continue his/her health insurance coverage at the same rate the employer paid, however, the individual is now solely responsible for paying the insurance premium.  Failure to pay the premium will result in coverage loss and upon doing so, the employer is mandated to advise the former employee that coverage will cease.  This is presented in writing 15 days before the coverage expires.

COBRA qualifying events encompass several categories:  terminated employees, employees enrolled in Medicare, individuals impacted by legal separation or divorce, spouse/child of a deceased employee and a child dependent who has lost dependent child status.  With the exception of terminated employees which carry 18 month coverage, all other categories are up to 36 months coverage.

Before electing to go with COBRA, it is prudent for an employee to compare various insurance options.  Just because it’s COBRA insurance doesn’t necessarily mean it will be the most cost effective.  If you have worked for a large corporation, there is a chance that your COBRA insurance coverage will be competitively priced, however for smaller employers, the same type of coverage is usually more.  Therefore, it is important to take this into consideration and shop around.  Many insurance carriers now offer quote estimates online and if you belong to professional organizations, some are linked to certain insurance companies.  If you do shop around, ensure that you always compare “apples to apples,” meaning the same coverage from carrier to carrier.

No matter which way you decide to go for health coverage, COBRA is an option that is legally mandated when your employment is terminated.  Remember however, that this type of coverage is temporary and aimed at assisting you through this period and you are responsible for taking that first step toward a successful transition. 

More information about COBRA is available at:  http://www.dol.gov/dol/topic/health-plans/cobra.htm