COBRA stands for Consolidated Omnibus Budget Reconciliation Act of 1985. Today Cobra begins to cover eligible employees the moment they are no longer eligible for employer partially paid health insurance. This loss of eligibility usually occurs due to a firing, a lay-off or reduced hours. At the point of loss of coverage, the employee has a chance to keep coverage through Cobra. Cobra is full-pay health insurance. Formerly, the employer paid for a portion of the coverage, now the employee is responsible for the whole premium, which always seems quite costly to the unemployed worker.
The Cobra Premium
Cobra medical insurance provides extended service of the coverage previously enjoyed as an employee for an additional 18 to 26 months. When cobra coverage is offered, the ex-employee has an opportunity to continue coverage for themselves, their spouses, and dependent children formerly listed as work insurance beneficiaries. The beneficiaries are insured at the same group rates they formerly had while the ex-employee was employed. The difference is now the ex-employee is responsible for the whole premium because the employer no longer pays his portion of the premium.
Eligibility for Cobra
Only private-sector employers can offer Cobra to their employees. If its not offered upon the acceptance of the job by the employee, it can be accepted upon release from the job. They must be enrolled in the qualifying employer sponsored insurance plan at least one day before losing their position to be eligible for Cobra. In the pandemic crisis, employees have 60 days after the job’s cessation to apply for Cobra. This is the 2020 special enrollment period extension on the federal exchange for the ACA (the Affordable Care Act) or Obama Care. The ex-employee may find more affordable insurance through these insurance options which are charged at individual rates, not group rates.
Non-Qualifying Events
Employees can lose their eligibility for Cobra if at some extended time their employer covers fewer than 50% of its employees in the previous calendar year.
If the employer is releasing employees due to an economic downturn and the employee ratio falls to less than 20 in number, everyone loses eligibility for Cobra.
If the employer decides to drop the coverage for the company, again you will no longer be eligible for Cobra.
Coverage for Spouse and Dependent Children
• Even if the ex-employee dies, their spouse, and dependent children are eligible for Cobra, if prior to death the ex-employee could have received Cobra.
• Neither divorce or legal separation prevent the spouse and dependent children from having access to Cobra coverage.
• The death of the covered employee does not end the Cobra medical insurance available to the surviving spouse and dependent children.
