COBRA is a very cool name for health insurance. Much cooler than the Plan F’s or the those named after gems and metals, like Ruby and Platinum. If we were to pick a health insurance plan based solely on its name, COBRA would be my first choice! But what is it? COBRA is actually an acronym that stands for the Consolidated Omnibus Budget Reconciliation Act (COBRA).
The Consolidated Omnibus Budget Reconciliation Act is an amendment of the Employee Retirement Income Security Act. The Internal Revenue Code and Public Health Service Act mandate that group health plans offer a limited time continuation plan for those that leave their job.
What is COBRA Health Insurance?
COBRA health insurance is special health insurance that’s offered to employees and their families in the event their employer’s group health coverage is no longer available to them. In other words, if you leave your job, you don’t have to lose your health insurance.
COBRA is continuation health insurance that covers your family with the same health coverage you had when you were employed. The cost of the insurance is much higher than you were previously paying due to the fact your employer is no longer pitching in to subsidize your premium. In essence, if you leave your employer you will still be able to get the same coverage, but you’ll have to pay for the full price yourself.
COBRA is not meant to be a long-term solution for your health insurance. The maximum amount of time you are eligible to be on a COBRA plan is 18 months. In some cases, you could be eligible for 36 months of coverage. Check with our COBRA provider (made available by your employer) to see what your options are.
Who Is Eligible for COBRA?
Losing your job is not the only way to become eligible for COBRA health insurance. If you have health insurance due to the fact that you work a particular number of hours per week, but then your hours get cut, you could become eligible. The spouse or dependent child can become eligible for COBRA in the event of: death, the covered employee qualifying for Medicare, or a divorce/legal separation.
Alternatives to COBRA Health Insurance?
If you are Medicare eligible, you may qualify for a special enrollment period (SEP) for those who are leaving/losing employer coverage. As long as you had “Creditable Coverage” through your employer, you may enroll in one of the following:
- You will have a full two months following the month you retire or lose employer coverage to enroll into a Medicare Prescription Drug Plan or Medicare Advantage Plan.
- You will have guaranteed acceptance into any Medicare Supplement (Medigap) Plan
If you haven’t done so already, you will want to enroll into Medicare Part A and Part B. It’s likely you will qualify for premium-free Part A due to your work history, but you will need to manually enroll into Part B. You can learn more by referring to our class on “How to Enroll into Medicare”.
For questions, support in enrolling into Medicare, a Prescription Drug Plan, Medicare Advantage plan, or any other Medicare related service, please contact us at the option that best suits you.