When an employee loses their job or gets reduced hours, they can opt into the Consolidated Omnibus Budget Reconciliation Act (COBRA), which is a program that allows the employee and their dependents the option to continue their health insurance coverage.
Employers with 50 or more full-time employees are required to provide health insurance coverage by assisting with premiums. An employee can become ineligible by being let go or falling under the required hours needed to qualify. At that point, the employer will stop paying their portion of the premium payments. COBRA gives the employee the option to retain that health insurance plan for a limited time as long as they can pay for it on their own.
To qualify for COBRA, the employee must have been enrolled in a group health insurance plan the day before the qualifying event occurred; qualifying events being voluntary or involuntary job loss and a decrease in the number of hours that results in loss of coverage. Similarly, the health insurance plan must have been effective at least 50% of the employer’s business days the previous year. If the employer goes out of business or stops offering health insurance to its employees, the leaving employee cannot qualify for COBRA.
The main premise of COBRA is that the no longer qualified employee will have the option to maintain the same coverage as if they still qualified. Therefore, any decisions that the employer makes about their health plan will be the same for the ex-employee. So, if the employer decided to change the plan or stop offering it, the ex-employee would have to deal with that. This is why it may not be the best decision for everyone to continue along with COBRA. The plan may no longer serve you if it were to be adjusted during the period you are on it. There is a 60-day period in which you can decide to continue your coverage or if you decide not to, you have 60 days to change your mind. If you decide to go with COBRA, you can be covered from 18 to 36 months dependent on the qualifying event.
COBRA insurance is given at a group rate. And while that may seem like a deal, it ends up being quite expensive because the employer is not helping with premium payments. The financial burden is solely on the ex-employee. However, COBRA can still be cheaper than some individual health plans. It is all about researching what the best option would be for yourself.
COBRA health insurance is a good option for those that want to retain their coverage after they are no longer eligible for their employer-sponsored health plan. However, the plan may not always be right for you and the price sometimes ends up being too high for most people to manage.
We hope this information on COBRA health insurance is helpful to you.
Empower Brokerage is dedicated to helping you educate your clients on the insurance they need and staying on top of their health. Whether it’s through webinar training, one-on-one calls, seminars, or marketing plans. We want you to be successful. Give us a call if you have any questions 888-539-1633.
Kayla is a graduate of Texas A&M University and joined the marketing team at Empower Brokerage in early 2021. She creates content for the company websites and assists with various marketing campaigns. LinkedIn Profile