COBRA: What’s It All About?

COBRA is an acronym for the Consolidated Omnibus Budget Reconciliation Act. The act provides continuation of group health plans for employers with more than 20 employees. The plan covers employees, and any other dependants of the group plan. You will, however, usually pay more for COBRA coverage as the employer will no longer be making contributions towards your coverage.

In some states you may be able to receive coverage similar to COBRA, even if your employer has less than 20 employees. However, you would need to contact the state insurance commissioner to find out if such coverage exists.

Why choose COBRA?

As COBRA provides continuation of your group health insurance, it gives you time to secure a new health plan either through reemployment or a marketplace policy. COBRA is not intended as a permanent health plan, but rather is a safeguard for employees and their families when the group plan owner loses his or her job. You may also apply for COBRA due to the death of the spouse who provided group coverage, if your hours are reduced, or you separate or become divorced from the policyholder.

Is COBRA the best option?

COBRA is not always the best or cheapest option. You may benefit more from taking out an alternative group health insurance plan or signing up on your spouse’s plan if possible. Before deciding to apply for COBRA coverage, you should also check the marketplace and Medicaid benefits to see if there are cheaper options available to you.

What am I covered for?

Your COBRA plan is basically a reflection of the coverage you were receiving under your previous group coverage plan. That means that your co-pay options, deductibles, etc. will remain the same, too. The plan will continue from the date of qualification for a period of 18 to 36 months, or until the qualifying persons take out or become eligible for another type of health insurance coverage, such as those found in the marketplace or through a new employer.

COBRA plans are not guaranteed for the maximum period, however. If, for instance, you continuously fail to maintain payments or your previous employer discontinues group coverage, your COBRA plan will terminate. If, for any reason, you lose entitlement to cover under COBRA, you will receive adequate notification that your coverage is due to end.

Will I need legal representation?

The process of applying for COBRA coverage is usually quite straightforward, so you shouldn’t need any sort of legal representation. However, if you feel you are entitled to COBRA coverage in accordance with the eligibility requirements but your application has been denied, you can seek legal advice from a labor lawyer.

There are other examples, where having a termination reason reversed, which could change your eligibility for COBRA, too. For example, you are not entitled to COBRA coverage if your employment was terminated for gross misconduct. However, if you can prove that you did not commit gross misconduct, you may then qualify for coverage.

More information on COBRA

Your group plan provider has a legal obligation to include literature with your plan that details your right to avail of COBRA coverage. The U.S. Department of Labor website also provides extensive information on COBRA and any related benefits. Alternatively, you can contact the Employee Benefits Security Administration for further information on your rights. If you are currently employed but suspect you may need to apply for COBRA coverage in the near future, you should speak to your manager or personnel department, as they will likely have dealt with other employees who have applied for a COBRA plan.