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COBRA Benefit Guidelines

If you have health coverage through an employer, but you lose your coverage, you may be eligible for coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA). It is a way for an employee to maintain his health care coverage at group rates. Many employees consider the insurance expensive because the employer is no longer subsidizing the coverage, but it is generally cheaper than purchasing the same benefits privately, according to the U.S. Department of Labor.

  1. Eligibility

    • To be eligible for COBRA coverage, you and your dependents need to have been participating in a health care plan offered by your employer. Employers covered by COBRA are those that have more than 20 employees. Also, a qualifying event needs to occur to bring COBRA into play. This could be firing, layoff or a reduction in the number of work hours.

    Getting Covered

    • Once the health plan's administrator is notified of the qualifying event, the administrator sends the employee a notice of his eligibility for COBRA coverage. The employee then has 60 days to decide on whether to continue health coverage through COBRA. If the employee decides to continue coverage, payment of the first premium must be made within 45 days.

    What is Covered

    • The health insurance coverage under COBRA will be the same as what the employee was receiving under the employer's plan. However, if the company changes its health plan for covered employees, that change will also be reflected in any employees receiving COBRA coverage through that company. COBRA-covered employees will have the same options, if any are available, that are offered employees covered by the company plan. This would mean if there is a period of open enrollment, COBRA-covered employees can make choices about the type of coverage they will have.

    Length

    • COBRA sets minimum time lengths that it will cover. A company can establish longer periods of coverage if it chooses. If the qualifying event that triggered the COBRA coverage was firing, lay-off or work-hour reduction, coverage can last 18 months from the loss of coverage. Under certain conditions, that length of time might become 3 years. Coverage can end earlier if premiums are not paid, the employer stops offering health coverage or other insurance is obtained.

    How Much?

    • You will receive the group rate coverage under COBRA, but the employer will not have to subsidize any of that cost. This means you will pay more than you did while covered by the company, but the cost should be lower than private coverage with the same benefits. You will also pay an additional 2 percent administrative fee. You may also have to pay retroactively back to the point when you lost your coverage with the company.

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