Health Insurance Articles
The COBRA Legislation And What It Means For Health Care
2010-11-18
When a person loses their job or is forced to take a reduction in hours, maintaining health insurance coverage is often a top concern and priority. The Consolidated Omnibus Budged Reconciliation Act (COBRA) extends medical insurance to employees and their families after leaving employment. COBRA legislation allows employees to continue receiving their group health benefits for a set period of time after employment has been terminated.
COBRA provides former employees and their dependents continuation of their overage at group rates. There are limitations as to who is covered based on how they left their place of employment, and generally, the rates are higher than the employee paid while employed. COBRA only covers employees that have worked for a company with 20 or more employees.
In order to be eligible for COBRA coverage, the employee must have been enrolled in their former employee's health plan. Their loss of employment or hours must be a result of a termination for a reason other than gross misconduct. When an employee is no longer employed, their employer must notify the health plan providers that they "qualifying event" has occurred. Within two weeks, beneficiaries will be sent an election notice allowing them to opt for COBRA coverage if they do not already have a health care plan in place from another source. Employees must opt for COBRA within a certain time, and indicate which of their qualified beneficiaries will be requiring coverage.
COBRA begins on the day when the employee's former health plan stops. In most cases, COBRA covers former employees for up to 18 months. If determined to be disabled by the Social Security Administration, they may continue to receive coverage for up to 29 months. COBRA legislation also provides for families and spouses of the employee to receive coverage for the same period of time. In cases of divorce, the former spouse may receive coverage for 36 months. If the former employee passes away, their spouse may continue to receive benefits for up to 36 months.
COBRA legislation does not provide for employees to continue receiving benefits if their employer goes out of business or if the employer terminates the health plan. Usually, COBRA packages cover doctor and hospital care (inpatient as well as outpatient). Generally, COBRA does not cover extended stay care, prescription drugs and surgery.
The recent health care legislation that was passed could possibly affect the length of time for COBRA coverage. For employees leaving their place of employment, medical insurance can be a worry. Being educated about COBRA coverage can provide peace of mind knowing when coverage is available and how long it will be provided.
