As medical costs increase, the worries of those who are without health insurance escalate as well. If you have lost your employer-sponsored health insurance coverage, learning about COBRA may help alleviate your fears.
The Consolidated Budget Reconciliation Act of 1985, typically referred to as COBRA, “is a federal law allowing some persons who lose their employer-sponsored health insurance coverage to temporarily continue that coverage at their own expense,” according to Carrie McLean, Call Center Training Manager and Consumer Health Insurance Expert at eHealthInsurance.
It’s important to understand that COBRA consists of “whatever plan your former employer had, but continued at your own expense. This means that COBRA benefits and costs can vary between persons who worked for different employers or were enrolled in different plans,” Carrie explains.
Not everyone who loses a job qualifies for COBRA, however, “Employees who are laid off or their dependents may be eligible for COBRA, so long as they worked for a company with twenty or more employees offering a group health insurance plan, and so long as the company is still in business and still offering group health insurance benefits to employees,” according to Carrie.
Although you do have the same health insurance plan previously provided by your employer, you should expect to “typically have to cover the full monthly premiums, which were previously split between themselves and their employers,” Carrie cautions. If you have a pre-existing medical condition, you might need to opt for COBRA; however, those who are healthy “are sometimes able to find more affordable health insurance options in the individual and family market,” adds this expert.
Learn About the Subsidy
A relatively new change is the federal COBRA subsidy, which Carrie explains was “designed to provide workers who were laid off between September 1, 2008 and May 31, 2010 with up to 15 months of premium assistance, to help make COBRA more affordable. The subsidy covers 65% of the monthly health insurance premiums which qualifying recipients are required to pay in order to maintain their COBRA coverage. The eligibility period for COBRA-eligible laid off workers to receive the federal subsidy expired June 1, 2010.”
In general, COBRA lasts only 18 months. Your employer or a plan administrator typically will inform you when the end of the period draws near.
“After COBRA expires, unless they have a new employer-based health insurance plan ready to pick up coverage, most consumers face three options,” says Carrie. These include purchasing your own coverage, applying for coverage through government-sponsored options, or opting out of coverage.
Carrie recommends working with a licensed insurance agent. In addition, depending on your own situation, you may want to contact the non-profit Foundation for Health Coverage Education to learn more.
Source: First person interview by Joanne Eglash with Carrie McLean, Call Center Training Manager and Consumer Health Insurance Expert at eHealthInsurance.