Why You Might Need COBRA

COBRA, which is the acronym for Consolidated Omnibus Budget Reconciliation Act, was introduced in 1986 to make health insurance available to employees who were terminated or voluntarily left jobs which offered them health insurance. The only exception to this is employees who were fired for reasons of gross misconduct. Employers are also required to offer COBRA when they reduce the number of hours an employee works in a week so that he or she is no longer eligible for benefits. COBRA recipients must pay the full amount of the premium, as there is no longer a contribution by the former employer.

COBRA is available for up to 18 months to people that are eligible in most cases. If, within the first two months, the main policy holder dies or becomes disabled while on the COBRA plan there are exceptions. If deceased, the surviving family members can remain on COBRA for up to three years and is disability is the case, COBRA coverage can be extended to two years and five months.

There are many reasons why people choose COBRA. One reason is that if the person was undergoing regular medical treatment while being employed, it is in their best interests for the policy to continue uninterrupted and not have to worry about the preexisting condition clauses that many new policies have that go back to six months prior to signing up for new plan coverage and it also applies to prescription medication payments.

People who are financially supporting a spouse and children usually opt to take COBRA due to the need to have continuing health care coverage in case of a serious injury or illness of a family member. COBRA is a way for former employees to lessen the financial risk their family must face during their time of transition to a new job or career.

Other reasons why former employees continue their health coverage this way is that this allows them to use this as a bridge from one employer to another. Most all new employees must endure the eligible waiting period before they receive health insurance or benefits, and COBRA allows them to breathe easier during this time.

Within 30 days of termination, the employee will have the option to choose if they want to continue their health insurance if the employer offers health insurance, making COBRA possible to obtain. The employee is granted 60 days to choose what coverage they want and to make the first premium installment. It also must be understood that the coverage is not retroactive and no benefits are paid before the first payment of the premium.