About the Initial Notice of Cobra Rights

The initial notice of COBRA rights is meant to inform you about your right to continue to have health benefits for a limited period of time after you lose your job and your responsibilities under this federal law. Many of these notices are subject to change because Congress oversees the laws concerning COBRA coverage. The Consolidated Omnibus Budget Reconciliation Act was started in 1985 and provides rights to the employee and any eligible dependents to be covered under a health policy. The plan or the employer is required to send out a notice and outline the eligibility for receiving COBRA. Paperwork for the initial notice of COBRA rights is normally sent out to former employees or their spouses within one to two weeks of employment termination.

Basic Rights

• If you receive a notice of COBRA rights, it is because you have been covered under a group health insurance plan. If you elect COBRA coverage, you can be covered under the former plan and maintain the same benefits and out-of-pocket limits for up to 18 months after you lose your job .The notice of COBRA rights will explain when your coverage became available, which is normally the last day of your employment, and will outline the steps necessary for you to maintain your eligibility. You will normally have 60 days from the last day of employment to use COBRA coverage.

Qualifying for COBRA

• The list of qualifying events that make you eligible for COBRA coverage are outlined in the initial notice and often include reduction of hours or your employment ending. The exception for being eligible for COBRA is if you were involved in any type of gross misconduct. In such a case, you will not be eligible for COBRA or your eligibility will be determined by your employer.

Beneficiaries

• You may be wondering whether COBRA will cover your family too. If your spouse and dependents were covered under your plan, you will be able to add them to the COBRA policy.

Benefits

• The normal period of time that you are covered by COBRA is 18 months. However, if you or someone in your family who is covered under the plan becomes disabled or has another "qualifying event," you may be eligible for an additional 18 months of coverage. You must notify the plan provider or insurance company in order to be considered for this extension. The maximum time that COBRA can be extended is a total of 36 months.

Effective Date for COBRA

• The initial notice of COBRA rights will state a deadline for submission of the COBRA paperwork. Once the paperwork has been submitted and your payment is included, the plan will be retroactive to the time that employment ended. A COBRA notice will normally include a breakdown of the cost and time period for coverage.

  The COBRA notice will outline four such dates before your option to elect expires. In the examples given, the amount due is prorated based on a termination of 10 days into the month.

  For example, if your last day of employment was August, 10, 2009, the letter might include the following: $358.73 is due if an enrollment form is signed and received in the office by 8/31/2009 for coverage through 8/31/2009.

  Or, $1,417.83 is due if the enrollment form is signed and postmarked by 10/25/2009 for coverage through 10/31/2009

  In this example, the amount per month is $529 for one person to have coverage under COBRA. The first date in the example is either based on the date of receipt or a postmark date, while the end date stipulates when coverage will end.

  The postmark or receipt date may not make sense at first, but it is normally laid out in this manner because your coverage will be retroactive. In this case, you would be paying $358.73 for coverage to be extended from August 11 through August 31, 2009, or $1,417.83 for coverage to be extended from August 11 through October 31, 2009.

  It is possible to have a longer period of coverage, so it is important to fill out all paperwork correctly when you elect to have COBRA.

Tip

• The base cost of COBRA is normally what you paid, plus what your employer paid and an extra 2 percent. COBRA is often an expensive insurance option, but if you have a pre-existing condition and want six months creditable coverage to switch to another insurance plan, COBRA is probably your best option.