How Does the COBRA Insurance Work?
If you have insurance through your employer, you’ve likely heard of COBRA insurance. It stands for Consolidated Omnibus Budget Reconciliation Act. It allows you to keep the same insurance you had through your employer even if you stop working for that employer.
[sc_content_link label=”Get today’s insurance rates.” cat=”life”]
Because you are no longer employed with the employer, you will be responsible for full payment of the premium. Your employer will not contribute to the premium, if they were when you were employed. You will be responsible for 100% off the premium, plus the insurance company can add up to 2% in administration charges to the premium.
You qualify for COBRA coverage if you had coverage at the time of your separation from the employer. However, if your employer closed its doors and that is why you are out of a job, you may not have access to the coverage. The employer needs to be actively offering the plan you had in order for you to get the benefit.
What Will the Insurance be Like?
Luckily, the coverage you get under COBRA will be identical to the coverage you had when you were employed. The only exception to the rule is if the employer changes coverage while you are under COBRA. If this is the case, your insurance would change accordingly.
What’s the Timeline?
If you leave your job or are fired, the employer has 30 days to notify the administrator of your insurance that you are no longer an employee. The administrator then has 14 days to let you know about your right to COBRA. From that date, you have 60 days to decide if you want to take the benefits. If you sign up, you must pay your premium by the date specified in the letter. Your coverage will then be dated back to the date of separation from your employer.
[sc_content_link label=”Shop and compare insurance quotes.” cat=”life”]
How Long Will You Have Coverage?
Generally, you are eligible for COBRA coverage for 18 months. This is only the case if you pay your premiums on time, though. Your administrator will let you know the due date of the insurance premiums as well as the maximum grace period that is allowed (usually 30 days). If you miss a premium payment, your COBRA coverage will end immediately and you will not be able to reinstate it.
Generally, your insurance will work the same way it did when you were employed. If you want to alter the plan, you will have to wait until your organization’s open enrollment period. During that time, you can change coverage, which many people use the opportunity to decrease the coverage to reduce the premiums since COBRA can be so costly.
COBRA is a way to protect you and your family should you lose your job. Health insurance isn’t only helpful, it’s required by law. If you can’t afford the premiums, you may have to look for alternative options to ensure that you have adequate coverage to keep you in compliance with the healthcare laws.
[sc_content_link label=”Get the right insurance coverage.” cat=”life”]