COBRA (Consolidated Omnibus Budget Act of 1985)

If your employer that supplied the health plan had 20 or more employees, you have an option to remain in the health plan by electing COBRA.

If you do continue the coverage, keep in mind that the premiums and the coverage start the day after your previous coverage terminated.  This means that if you wait to elect to continue the coverage on the 60th day, you will be responsible for the premiums of the first 60 days.  Even though this will be the same coverage that you had while employed, you will now be responsible for 100% of the premium and an administration fee up to 5% of the premium. This can easily triple the amount or more of the premium that you paid while working.

There is an important update this year for those utilizing the COBRA option.  On February 17, 2009, President Obama signed the American Recovery and Reinvestment Act (ARRA, or Stimulus Plan) http://www.recovery.gov/ .  One of the features of this new law provides a subsidy that may reduce by 65% the cost of your COBRA coverage.  This applies to those that lost their employer sponsored coverage on any date between September 1, 2008, and December 31, 2009.  The federal government will subsidize the cost of the coverage for nine months.  You will only pay 35% of the coverage and the government will pay 65% to your former employer.  This will make keeping your coverage more reasonable and affordable if you lose your job.

If your COBRA premium assistance is denied you may request an expedited review at

http://www.continuationcoverage.net/. This site is provided by the CMS (Centers for Medicare and Medicaid Services).

You can lose your health benefits in ways other than direct job loss and still be eligible for COBRA.  You might be a person who has reached the maximum age to be eligible for parental group health plan or is no longer a qualified full time student.  You may be eligible to obtain COBRA coverage for longer:

If a family has lost coverage due to an employee's death, the family will be eligible for COBRA coverage for 36 months (at the same COBRA cost); or

If the loss of coverage is due to divorce from the employee, you will be able to have COBRA coverage for 36 months; or

If you elect COBRA and become disabled, you have the right to maintain the coverage for 18 months and an additional 11 months if you were the employee.

You have the right to continue COBRA coverage for everyone that was covered under your plan or just one person or more whether that is yourself, your spouse or partner,  any or all of your children. 

Make sure you are timely with all your applications and paperwork.  Besides having the 60 day deadline to elect COBRA, you also have only 30 days to change to a spouse's or partner's coverage.  Most plans allow you to join a health plan with a qualifying event.  Job loss, divorce, death, etc., are all qualifying events, but you must always remain timely.  Remember the time limits, and do not lose out on an opportunity for group coverage because of a missed deadline.

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