So you want to understand COBRA insurance? It’s important to get a complete and thorough understanding of the COBRA law, also know as the Consolidated Omnibus Budget Reconciliation Act, as well as understand who is eligible, how to sign up, and when you should consider alternatives. Knowing this critical information will help you make a smart decision for your household

First Up..Understand the COBRA Insurance Law

In 1986, Congress passed landmark legislation known as the Consolidated Budget Reconciliation Act, or COBRA. This piece of legislation, for the first time ever, protected people from suddenly losing their health insurance if they lost, quit, or retired from their job. In it’s essence, COBRA health insurance laws allow an employee and anyone else who was covered on the employee’s health insurance plan, to continue their coverage on that employer plan. That means that an employee and their family could choose to keep the exact same coverage (doctors, hospitals, prescriptions, everything). So what’s the catch? Well, there are two main downsides to COBRA medical insurance coverage. First, under the law, the employee is responsible for paying the full premium and a 2% administration fee. Since most employers pay up to 80% of health insurance costs, this is a pretty substantial amount, sometimes upwards of $1000 monthly for families. Moreover, COBRA insurance only lasts eighteen months for most people. That means that eventually you will need to seek out other insurance either through a private company or through a new employer. This can be difficult, especially if you have a preexisting condition.

So How Do You Qualify?

Luckily, it actually isn’t too hard to qualify and most people find they are eligible for COBRA health insurance. The law outlines three main criteria for signing up for COBRA continuation insurance – qualifying plan (the plan of your employer), qualifying event (why you lost coverage), qualifying beneficiaries (who is covered), and although they sound complicated, it actually is pretty simple.

• Qualifying Plan: Your previous employer’s health insurance plan had at least 20 full time employees (or their part time equivalents
• Qualifying Event: You were terminated, laid off, lost, quit, or retired from your job without any gross misconduct (i.e. stealing, sexual harassment, or other serious offenses)
• Qualifying Beneficiaries: Anyone who was covered under your previous plan, is almost always covered with COBRA – spouses, children, and other dependents. You can also add new people just as you could under your plan – remember the plan is identical!

What about COBRA Insurance Enrollment?

At this point, hopefully you understand what is COBRA insurance and now you may be thinking – “Great, how do I enroll?” and lucky for us, it is very simple. Within 14 days of the last day of your health insurance coverage, your employer is required by law to provide you with a COBRA election form. Simply fill out that form with the names of everyone you would like COBRA continuation insurance for and send that in with a payment for the full premium. It must be sent within 60 days of you receiving the notification.

Should I Consider COBRA Insurance Alternatives?

Pretty much every insurance and financial expert thinks it is important to consider alternatives to COBRA. This is mainly for two reasons. First COBRA is EXPENSIVE. There likely are many other private insurance plans that will offer a much better deal for similar coverage. Secondly, there may be a better plan out there for you. However, this always depends on your health condition, lifestyle, budget, and needs, so we recommend always at least getting quotes for other insurance companies, but making the decision that best suits your needs.