COBRA Health Insurance Coverage-The Basics
COBRA health insurance coverage comes from the Consolidated Omnibus Budget Reconciliation Act. This Act allows you to maintain health insurance coverage if you lose it through your employer. In this article, we will go over how to qualify for COBRA, what it covers, and how to manage the cost.
Qualifying for COBRA
To qualify for COBRA coverage, you must meet certain requirements. The first requirement is that you must work for a state or local government agency or by a private company with 20 or more full-time employees. Additionally, you must have been enrolled in the group health insurance plan at least one day before the qualifying event occurred. A qualifying event is an event that causes you to lose your health insurance. Such triggers would include: leaving your job (voluntarily or involuntarily), having your hours reduced, or being covered under the plan of an employee who passed away or became qualified for Medicare coverage. Lastly, to qualify for COBRA your employer must continue to offer a health plan after your qualifying event. This means you would not be eligible for COBRA health insurance coverage if your employer goes out of business or ceases to offer health insurance benefits.
Coverage Under COBRA
Under COBRA, you will receive the exact same coverage as you had before your qualifying event. If your employer decides to change plans, your plan will change too. If you had coverage for prescription drugs, vision, and dental, you will still have that coverage under COBRA. Life insurance and disability coverage do not fall under this provision.
If you lost your health insurance coverage because of a reduction in hours, you can receive COBRA coverage for up to 18 months. If you lost coverage due to losing your job, you can receive coverage for up to 36 months. Your coverage may be shorter if your old employer ceases to offer health insurance. It also may be reduced if you do not pay your premiums or you become eligible for another group plan or for Medicare.
Cost of COBRA
COBRA gives you access to group coverage prices even though you are no longer have employer coverage. However, your expenses will be higher than what you paid before. Before you may have only been responsible for 10-20% of the premium, under COBRA you will responsible for 102% of the premium. This includes 100% of the plans cost and 2% for an administrative charge.
If you find that this will be more than you can handle, there are other alternatives that can help you manage the cost. The first of these is using a Health Savings Account. An HSA will allow you to pay medical expenses with pre-tax money. This can help you reduce your costs by eliminating taxes on a portion of your income. You may also want to see if your employer offers a lower-cost health plan that you can enroll in. This can reduce your cost for COBRA health insurance coverage. Whatever the case is, meet with your health plan administrator, they can guide you through this process.
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