Everything You Need To Know About COBRA

With many men and women presently experiencing the hardship of losing employment because of cut-back induced lay offs, the need to educate insured workers on their options upon receiving their pink slips is immense. Health care continues to be a hot button in the political world, however this political atmosphere in no way entrenches upon the rights of a laid off worker to keep their health care coverage through the COBRA plan.

What Exactly is COBRA?

The Consolidated Omnibus Budget Reconciliation Act enacted in 1986, was designed explicitly to prevent immediate insurance coverage from expiring following termination of employment. COBRA allows for a worker that lost their job to apply for COBRA insurance within a period of Two months following loss of employment. Following this Sixty day period, COBRA insurance will not be available as an option.

Expense of COBRA

COBRA insurance provides the exact same quality of insurance coverage that was available as a current employee but can be significantly more costly, as the ex-employee must provide for the employer subsidized amount as well as their own share of premium costs. This total cost is often amended by a 2% administrative fee that is tacked on by employers, as well.

A quick example of a cost shift to COBRA that would occur in an household would be that of an employee originally paying a $300 dollar premium per month for health coverage. If said employee was only paying 30% of the total cost-$300-and their employer was covering the remaining 70%-$700-then COBRA coverage cost would amount to $1000 monthly, plus the 2% fee-if applicable.

What if COBRA is too Costly?

The time period to decide upon enrolling in COBRA coverage-60 days-is designed to allow an ex-employee to review their options following loss of employment. A healthy family, for example, may elect to enroll in a high deductible, low premium cost health coverage plan until a more adequate plan may be obtained via future employment.

Health Care Reform COBRA Changes

The patient Protection and Affordable Care Act passed in March 2010 does not explicitly make changes to COBRA coverage, in that its primary goal was to address adequate health care coverage for those that lack it. 2014 will, in fact, entail a change to COBRA however, as it allows employees to obtain insurance exchanges and therefore obtain different health insurances via providers other than that of their employers. 2014 will not change anything else about COBRA, as the calculations for COBRA coverage will be the same, and employers will continue to subsidize standard employee coverage the same way.