At what point is someone eligible to access COBRA health coverage and in what circumstances could they be barred from that access? Here's the COBRA 411.
In addition to protecting certain individuals from high health care prices, COBRA ensures that spouses, family, and the retired are entitled to health care access when a family member experiences a major life event. Here’s what you should know about how to access COBRA health coverage as an employer.
How does COBRA work?
The Consolidated Omnibus Budget Reconciliation Act of 1985, or COBRA, entitles certain people to access health coverage at group rates. COBRA only works after certain events have occurred, as it’s not something that anyone can access at any time.
The benefit of COBRA is that it allows people to get health insurance at the group rate, rather than the individual rate. COBRA participants still pay the premium themselves, though. This differs from actively employed people, who benefit from the employer paying a partial premium on the same group rate.
Who is eligible for COBRA?
Major life events qualify a person for COBRA. These include things like getting a divorce, becoming a widow or a widower, losing your job, or aging out of your parents health insurance plan. In addition to experiencing this kind of life event, people must also have a current health plan that is subject to the COBRA law. Otherwise, continuation of the health insurance won’t be possible under COBRA. Lastly, a person must be considered a qualified beneficiary in order to access COBRA.
How can people access COBRA?
The only way that people can access COBRA is if a qualifying event notice is submitted. Essentially, this is a notice that informs the insurance company of your eligible life event. The responsibility of submitting this notice varies depending on the actual event.
For example, the employer is responsible for submitting the notice to the health insurance company in the instance of employee termination, employe death (in which the spouse or beneficiary will continue receiving coverage), or reduction of employee work hours. The employee is responsible for informing the health care company in the instance of more personal matters, such as divorce or legal separation.
How long can you stay on Cobra?
You can stay on COBRA for up to 18 months. If you have a spouse and dependents, they may be able to stay on your insurance plan for up to three years.
How much does COBRA insurance cost per month?
It’s important to remember that employers don’t contribute to COBRA health insurance premiums for employees who don’t work at the company anymore. Therefore, the employee needs to calculate their COBRA insurance cost by adding their regular premium to the premium that their employer has been paying. Then, a 2% service charge should be added.
Are you eligible for COBRA if you quit your job?
Yes, people who quit their job or are terminated will be able to access COBRA, as long as they meet the other qualifying characteristics. Assuming you are not fired for gross misconduct, and are still being covered with a group insurance plan on the day you lose your job, you are eligible to continue receiving benefits through COBRA.