If you've lost a job or a spouse, the Consolidated Omnibus Budget Reconciliation Act (COBRA) can help lighten your burden. COBRA can be your temporary protector, extending the health coverage you received from an employer's health plan for a limited time. COBRA can also help you if you had insurance through a spouse who died or a spouse you are divorcing.

COBRA benefits have helped many Americans as a quick fix, buying them some time to either find a job that offers health benefits or to purchase an individual health policy.

Although COBRA coverage is expensive, it allows you to continue your familiar plan for 18 months or more — giving you continuity during a period of many changes. Find out whether you qualify for COBRA and the questions you should ask.


Who can get it

If you or your spouse had health insurance from a company with 20 or more employees before the life change took place, you may qualify for COBRA. Check with the benefits manager at the company to confirm. If you or your spouse worked for a federal agency, contact that group's personnel office to find out about benefits under a law similar to COBRA. Here's an overview of the life changes COBRA covers.


If you are an employee, you may qualify if:

  • you leave or lose your job
  • your work hours are reduced

If you are an employee's spouse, you and any dependent children may qualify if:

  • your spouse leaves or loses his or her job
  • your spouse's work hours are reduced
  • you lose your spouse through death
  • you and your spouse divorce or legally separate
  • your spouse enrolls in Medicare
  • COBRA could also apply if your child loses coverage because they are no longer considered a dependent based on age or other factors described in the health plan's guidelines.

A note about dependents: Your state may soon require health insurance companies to expand the definition of dependent. To see the latest developments for your state, check the summary prepared by the National Conference of State Legislatures, a nonpartisan organization.


If you have questions or believe that you are being wrongly denied COBRA coverage, call the U.S. Department of Labor's Employee Benefits Security Administration. Their toll-free hotline is 1-866-444-EBSA.


Length of coverage

If you are the employee and you leave a job, you and any family members covered under your policy qualify for 18 months of coverage. However, you may be able to get an extension due to disability or if another major life change occurs. Your health plan's administrator can confirm whether you are eligible for an extension.


If you are the spouse or dependent child of an employee, you are entitled to a maximum of 36 months of coverage if you are losing coverage because of a death, divorce or legal separation, or because your spouse enrolled in Medicare. COBRA refers to these events as “qualifying events.”


You can also check with your plan administrator to see if you can convert your COBRA coverage into an individual plan when COBRA ends. However, this is generally an expensive option.


Costs

COBRA is expensive, since it requires you to pay part or all of your monthly insurance premium. Chances are that your employer paid at least part of the premium when you were an employee and will not give you that subsidy after you leave.


The health plan can also charge you up to 2% more for administrative costs. This means that if your health plan cost $300 each month and your employer paid $260 and you paid $40, you would now have to pay the full $300 plus the possible 2% fee, totaling $306 per month.


Keep in mind, however, that the cost of having no insurance could greatly surpass COBRA fees should you need expensive medical care, like surgery or cancer treatment. Also note that it's worth your time to explore the option of individual health insurance coverage, which could be lower than the costs of your COBRA coverage depending on your age and health status.


How to get it

As soon as you realize you may lose health care coverage, contact the benefits manager (whether at your workplace or your spouse's). They will tell you the deadlines and steps you need to take to request COBRA benefits. See a list of questions that you can print out and take with you.


Important deadlines:

  • If you are the spouse or child of an employee, you must notify the plan within 60 days of the “qualifying event.” The qualifying event could be a death, divorce, legal separation, or a child's loss of dependent status under the plan.
  • Your plan has to give you 60 days to respond to an offer of COBRA coverage. If you don't respond in writing within the 60 days, you will lose all rights to COBRA coverage.
  • Within 45 days of signing up for COBRA coverage, you must pay the first premium bill. You must pay the premium monthly even if you don't receive a monthly bill.

Questions to ask

COBRA is complicated. As soon as you think you may need COBRA, it would be a good idea to print out the questions below. Then go over them with the benefits manager at the workplace through which you currently have coverage.


  • Will I be able to continue my health care coverage through COBRA? If so, will my coverage change?
  • Will my coverage under COBRA be any different than the coverage I had while I was an employee?
  • What steps do I need to take to receive COBRA benefits for me and my family?
  • What paperwork is required? What are the deadlines?
  • How long will the COBRA coverage last?
  • What will I have to pay for COBRA?
  • Will my employer subsidize the cost of my COBRA benefits?
  • When my COBRA coverage ends, will I be able to convert my health plan into another policy without having to undergo medical exams and tests? What are the deadlines for converting?

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