The COBRA law requires employers who provide a health insurance plan for employees to allow qualified workers to continue their health insurance coverage at their own expense after they leave employment there. If businesses fail to comply, they are not allowed to deduct their health insurance costs from their taxes. COBRA stands for Consolidated Omnibus Budget Reconciliation Act. In was signed into law in 1986 by President Ronald Reagan.
Identification
In order to qualify for continuation coverage under COBRA, your employer must have a group health plan that covers at least twenty workers. This applies to government employees as well as those in the private sector. You must have been eligible for the employer's health plan while you worked there. When you leave employment under these circumstances, COBRA allows you and your family to keep your health insurance for a certain period of time.
Function
The function of COBRA is to protect the health of workers and their families in the event of a change of employment or health insurance coverage status. However, COBRA only allows you to have continuation coverage if you left work for a qualified reason. If you quit your job, were laid off or even fired, you are covered as long as it was not for gross misconduct. If your hours were reduced, you became eligible for Medicare, you lost your status as a dependent child, or got divorced or separated then you are covered. If the employee with health insurance dies, his family is eligible for continuation coverage under COBRA.
Time Frame
COBRA only allows you to continue your health insurance coverage for a limited time. If the covered employee was terminated or had hours reduced, COBRA allows her to get continuation coverage for 18 months. In the case of Medicare qualification, divorce or separation, loss of dependent child status or death, the spouse and dependent children can get continuation coverage for 36 months.
Features
One of the most prominent features of the COBRA law is its strict notification requirements. COBRA requires employers to inform covered employees and families that they are eligible for continuation coverage. The employee then has 60 days to notify the plan administrator that they want it. Employees are also required to notify the plan administrator if they have any changes of status. If the employee fills out the paperwork and pays the COBRA premiums in full and on time, health insurance continues uninterrupted for the designated period of time.
Considerations
Employees must carefully consider whether they want to utilize COBRA. This is because continuation coverage can be very expensive. Most employers force people using COBRA to pay 102% of the health care premium. This can be even higher if there are disability provisions. Since many employers supplement health care premiums for workers, the cost can be significantly higher then the employee is used to paying for health insurance. In addition, employees are responsible for deductibles and co-payments. They are also subject to limits on coverages and benefits. If any premium bills are unpaid, continuing coverage can be canceled.
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