Insurance: COBRA Benefits

The Consolidated Omnibus Budget Reconciliation Act (COBRA) provides continuation, upon a qualifying reason, of group health insurance coverage that has been otherwise terminated. Though most often associated with the death of an employee, there are several qualifying reasons that a former employee, spouse, or dependent may obtain the temporary extension of health insurance benefits.

COBRA insurance is the continuation of group health insurance for a former employee of a company or the spouse and/or dependents for the former employee. Acceptable and qualifying situations must occur in order for COBRA benefits to be offered.
In order for the former employee to be eligible for health coverage continuation he/she must have experienced either voluntary or involuntary termination not due to gross misconduct or have experienced a reduction in the number of work hours therefore making the employee ineligible for health benefits. A spouse or dependent may be a COBRA recipient in the event of either of the aforementioned reasons, the divorce or separation from the providing employee, the death of the spouse whose employment was the policy provider, or the covered employee becoming eligible for Medicare.
To be offered COBRA you must have been enrolled in the health plan provided by the covered employee the day prior to the occurrence of the qualifying event. The employer must notify the health plan administrator within fourteen days of the event that caused loss of the health plan, and the provider will then notify the beneficiary that he/she and/or his/her dependents qualify, and the potential beneficiary had sixty days to agree to or decline the plan. The recipient then has forty-five days to pay the premium costs. If the beneficiary initially declines the offer, he/she still has until the end of the original sixty days to revoke the decision and accept the coverage.
This is an opportunity to continue with health coverage at a group rate rather than at an individual rate, and although the premium will be more expensive than you were paying before the qualifying event due to the fact that the former providing company will no longer be paying its part of the premium, the opportunity will be significantly less expensive than a premium paid at the individual rate. This temporary relief is provided in order for former employee or beneficiary to research and contemplate other opportunities for health insurance.
The plan is a temporary offer and is usually limited to a maximum of eighteen months, but reasons for extensions do exist on a case by case basis. The loss of opportunity to continue with the policy will occur if premiums are not paid in a timely manner or if the employer at sometime during the beneficiary’s coverage period ceases to carry any group insurance plans.

Article Tags: Cobra Benefits, Former Employee

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