Are you eligible for COBRA
three groups of people, known as beneficiaries, are eligible
for COBRA Insurance coverage: employees or former employees in private
business, their spouses, and their dependent children. One
of several types of "qualifying events" must occur
in order to trigger COBRA, as the chart below outlines. You
then are eligible to buy COBRA for the maximum coverage period
as determined by your beneficiary status and the qualifying
event. Remember: You don't have to stay on COBRA the whole
time nor will you always be able to if different
coverage comes along.
Insurance coverage periods
eligible for COBRA
or legal separation
of dependent-child status
eligibility also extends to workers in state and local government,
as well as to workers classified as independent contractors.
However, the law grants an exemption to the District of Columbia,
federal employees, certain church-related organizations, and
firms employing fewer than 20 people. The IRS has said that
employers must figure part-time workers into their employee
total to determine if they can claim exemption.
you work at a small company that is exempt from federal law,
you might not be completely out of luck. Many states have
adopted their own laws, sometimes known as "mini-COBRA,"
that often grant broader rights in determining eligibility
for coverage. Check with your state insurance department to
find out if you are entitled to continued health care coverage
under a state COBRA plan. (For insurance department contact
information, choose your state from the pull-down menu at
the top of this page.)
with self-funded health plans (generally large corporations)
are exempt from state regulation of their plans, but employers
that buy coverage through outside insurers (generally smaller
businesses) are subject to such laws.
mind, too, that you must actually be covered under an employer
health plan to be eligible for COBRA. If your employer has
more than 20 workers but doesn't offer health coverage, or
offers coverage to only certain groups of employees and you're
not one of them, you won't be eligible for COBRA even if one
of the qualifying events occurs nor will your spouse
or children be eligible.
Insurance coverage ends when:
reach the last day of maximum coverage
are not paid on a timely basis
employer ceases to maintain any group health plan
obtain coverage through another employer group health
plan that does not contain any exclusion or limitation
with respect to any pre-existing condition of a beneficiary
beneficiary is entitled to Medicare benefits
isn't the only issue you should consider when it comes to
COBRA Insurance . Cost is another major factor. When you're on COBRA,
no longer will your employer be picking up a big chunk of
the monthly premiums. You'll be responsible for paying the
full amount, plus a maintenance fee of up to 2 percent.
You'll have to weigh your ability, and desire, to pay the
extra expenses against your and your family's need for health
coverage and the financial dangers of going without it.
is, though, that if you have children, you should have health
insurance to help pay for all those routine check-ups and
immunizations they need, plus the unexpected emergencies.
One broken wrist could set you back thousands of dollars.
are you feeling? If you have ongoing medical problems or need
prescriptions frequently, you should probably opt for COBRA
not only because the insurance coverage will help defray your
out-of-pocket costs, but because it will ensure that you don't
inadvertently lock yourself out of the health insurance market.
who have "pre-existing conditions" meaning
medical problems that exist before you buy a policy
find it much more difficult to buy individual health coverage
because their policies can often be "medically underwritten."
That is, insurers can consider the health of the applicants
when deciding whether to insure someone. They could reject
you for coverage completely or exclude coverage of your existing
condition which goes against the very reason you need
health insurance (some states, though, like Washington, ban
that practice, and federal law forbids all group health plans
from medically underwriting you).
the federal Health Insurance Portability and Accountability
Act (HIPAA) guarantees that people who have continuous health
coverage and meet certain other qualifications
can't be denied insurance even if they have pre-existing conditions.
So if you forgo COBRA and thus create a gap in your coverage,
you would lose your HIPAA protection when you later decide
to buy insurance.
factors to review when considering COBRA: the extent of your
health plan benefits and your network of doctors and other
health care providers. If your plan has extensive benefits,
you might want to stay on COBRA even if you're eligible for
coverage under your spouse's health care plan. The IRS says
you have that right. And you might not want to risk losing
a favorite doctor if you have to switch plans.
decide against COBRA, you can still consider buying individual
insurance or even a short-term policy to tide you over until
you land a new job with health benefits.
offered under COBRA must be identical to the coverage you
had before. "An employer cant allow employees to
choose a less expensive plan," notes Paul Fronstin, a
senior research associate with the Employee Benefits Research
Institute, a Washington, D.C.-based nonprofit, nonpartisan
organization that conducts research about employee benefits.
However, employers can but are not required to
give you the option of dropping such "noncore" benefits
as dental and vision care. On the other hand, if you were
covered by, say, three different health plans at the same
time (one for hospitalization, prescriptions, medical, etc.),
you have the right to elect continuing coverage in any or
all of them.
rules for beginning COBRA
and your employer must follow proper procedure to initiate
COBRA Insurance, or else you could forfeit your rights to coverage.
The employer must notify the health plan coordinator within
30 days after an employee's death, job termination, reduced
hours of employment, or eligibility for Medicare.
of divorce, legal marital separation, or a child's loss of
dependent status, it is your or your family's responsibility
to notify the health plan coordinator within 60 days of
the plan coordinator then has 14 days to alert you and your
family members in person or by first-class mail
about your right to elect COBRA. The IRS gets tough here:
If the plan coordinator fails to act, he or she can be held
personally liable for breaching their duties.
are two exceptions to the notification rule, if the plan allows
them: First, the time limit for both notification periods
can be extended; and second, employers may be relieved of
the obligation to notify plan coordinators that the employee
has quit or reduced their work hours. It is then up to the
plan coordinator to determine if a qualifying event has
occurred. You should find out in advance what your health
spouse, and children have 60 days to decide whether to buy
COBRA. This election period is counted from the date your
eligibility notification is sent to you or the date that you
lost your health coverage, whichever is later. Your COBRA
coverage will be retroactive to the date that you lost your
benefits (as long as you pay the premium).
the election period when you have to choose whether to buy
COBRA, you might initially decide not to, which means you
waive your right to coverage. However, as long as the election
period hasn't expired, you can change your mind and revoke
your waiver, and COBRA coverage would then start on the day
the waiver was revoked. Bare in mind that if you visit a doctor
during the period you initially waived COBRA, you will not
be reimbursed for that claim even if you later decide to buy
COBRA. In this case, COBRA is not retroactive to the date
you lost your employer-sponsored plan.
COBRA Insurance tidbits
a few other things you should keep in mind:
After you elect COBRA, you have to pay the first premium
within 45 days. And that first premium is likely to be
high because it covers the period retroactive to the date
coverage ended through your employer. Successive payments
are due according to health plan requirements, but COBRA
rules allow for a 30-day grace period after each due date
Although COBRA sets specific time limits on coverage,
there is nothing stopping the health plan from extending
your benefits beyond the coverage period.
The U.S. Department of Labor (DOL) has jurisdiction over
issues involving notification of private-sector employees
about COBRA coverage. Employers that fail to comply with
the notification rules face fines of up to $110 for every
day that no notice is sent after the deadline. In addition,
the IRS can assess an excise tax against any company that
does not comply with COBRA regulations.
COBRA makes no provisions for life insurance
COBRA information must be contained in the summary of
the health plan description employees must receive when
they are new to the plan.
If your employer offers an open enrollment period to active
employees and you're on COBRA, you must also be given
the option to switch plans during that time.
If the health plan offers the option of converting from
a group plan to an individual policy under COBRA, you
must be given that option and allowed to convert within
180 days before COBRA ends. But you'll pay individual,
not group, rates, and switching to individual coverage
could weaken any HIPAA protections you have.
If you relocate out of your COBRA health plan's coverage
area, you will lose your COBRA benefits; the employer
is not required to offer you a plan in your new area.
Your premiums can be increased if the costs of the health
plan increase for everyone at the workplace, but generally
they must be fixed in advance of each 12-month cycle.
The plan must also allow you to pay premiums on a monthly
basis if you want.
Neither the health plan nor the employer are required
to send you monthly premium notices, so make sure you
pay attention to due dates.
People eligible for Social Security disability benefits
may receive COBRA coverage for 29 months.
are several adjustments to Cobra laws effective 1/1/2000.
The following information is a guide only and may contain
inaccuracies. Contact your benefit coordinator for specific
information regarding your situation. We list only what we
consider to be the major issues.