Health Insurance Articles
A Look At Government Programs That Can Help You Avoid A Lapse In Health Insurance Coverage
2010-04-19
One of the most expensive monthly payouts for many Americans is their health insurance coverage. Even an employer-sponsored plan can carry with it a large monthly premium, which can place financial strain on individuals and families alike. Sadly, due to the economic downturn of the last five years, many workers have found themselves unemployed, unable to get non-employer health insurance because of the costs involved. For that reason, the US Government created the Consolidated Omnibus Budget Reconciliation Act (COBRA) in 1986. Although it has been on the books for over twenty years, many Americans are unaware of what it does, let alone its existence. It is effectively a health insurance assistance program, which allows employees who have been laid off or terminated to retain their employer healthcare benefits. This can help individuals avoid a lapse in their health insurance coverage.
COBRA works not as a way to get health insurance, but as a way to retain it. An employee who has been laid off for any reason other than gross negligence is entitled to use COBRA, as are their spouse and children, even if there is a recent or pending divorce. It also applies to companies that have gone out of business. COBRA allows former employees to continue their coverage after being laid off, but does come with several restrictions. First, the premiums paid will come entirely out of the pocket of the individual, not the company. If an employer partially subsidized a health insurance payment, they will no longer be required to do so. Second, a person wishing to use this legislation must declare that they wish to do so, typically to the employer's benefits manager, within 60 days of what is known as a "qualifying event" occurring. This event can be anything from a layoff to a divorce or a death.
Once an individual has elected to use COBRA health insurance assistance, they are required to pay their full monthly premiums, and may also be required to pay a 2% administration fee. Although this kind of health insurance coverage can be costly, it helps to prevent the individual from lapsing in coverage during a difficult time, and also eases the burden of having to find new coverage. With no job, many health insurance providers will be leery of offering a new plan. COBRA coverage can last 12 months, and in some cases even up to 18, giving ample time to find a new job and remove the need for dependence on COBRA.
Although this plan operates only as a stopgap, it can help those facing a poor set of circumstances or a sudden lack of employment to stay covered and safe while searching, obtain health insurance, or achieve better fortunes.
