COBRA Basics and Benefits

Employees and Group InsuranceWho is eligible for COBRA?
An employee and their dependents may be eligible for COBRA if the employee loses his or her group medical insurance due to a voluntary or involuntary job loss, or becomes ineligible for the health benefit, such as in the case of a worker that becomes a part-time employee. COBRA (“Consolidated Omnibus Budget Reconciliation Act”) gives people who lose their employer-sponsored insurance the option of keeping their group plan for a limited period. The policy would mirror the benefits of the company’s insurance policy. Also, coverage would extend to any supplemental benefits, such as dental, vision, and chiropractic benefits, if the individual was covered under the group plan.

Who is not eligible for COBRA?
Following are examples of when an employee or their dependent(s) might not qualify for COBRA membership:
• The group insurance contract is cancelled.
• The company goes out of business.
• The employee doesn’t enroll within 60 days from when they become eligible.
• The employee loses their job due to gross misconduct.
• If an employee obtains a divorce, their former spouse becomes ineligible for COBRA.
• A child turns 26 years old.
• The COBRA premium is non-paid.
• Death.

How long could I stay on COBRA?
Employees that work or worked for a company that employs 20 or more employees are subject to Federal COBRA, which allows employees to keep their group health plan for up to 18 months. Those who worked for smaller companies may obtain COBRA through their state. In California, the continuation plan is called ‘Cal-COBRA’; it gives employees up to 36 months of coverage. There is an exception to the 36 month maximum on Cal-COBRA. If a California employee worked for a company of at least 20 employees, they may enroll on Federal COBRA for 18 months then apply for Cal-COBRA for 18 months for a combined total of 36 months.

How much does COBRA cost?
The premium will be the employee’s portion of the premium plus the share that the company subsidized. In addition, an administrative fee of either two percent for Cal-COBRA or ten percent for Federal-COBRA will be applicable.

What are my best alternatives to COBRA?
Since the COBRA premium tends to be steep, people can often find a better deal by exploring their options. If you don’t have a serious, chronic, or recurring health condition, a personal insurance plan could give you the most affordable solution. Click affordable medical insurance for information on Kaiser Permanente health insurance. If you do have a medical condition and you are coming off of a Kaiser group plan, then, an alternative to COBRA may be a Kaiser Conversion Plan. Usually, it is as pricey as COBRA, but at least, you won’t be restricted to an 18-month policy term. Like COBRA, you can’t be denied for health reasons.

Can I switch COBRA plans?
Yes. When your former employer has their annual open enrollment period, you will be notified of the renewal rates and coverage options. At that time, you could change plans, so long as the group policy allows it. Contact the Human Resources Department of your former employer for pricing and benefit information.

Comments

Comment from Thomas Cazneau
Time: August 11, 2011, 12:44 am

I have heard that Cobra can be very expensive or very inexpensive in some cases. I do like how it guarantees an extension of coverage for those who have pre-existing conditions, who might have trouble getting private personal health insurance. However, it probably is not as great benefit wise or price wise as an individual health insurance plan in general.

Comment from Bessie
Time: August 11, 2011, 8:55 pm

This is great information. Having never been on Cobra, I really didn’t understand how it worked. I like the fact that Cobra would be like the company’s insurance policy. I think it would be my choice only if there are no other options available.

Comment from Holly
Time: August 12, 2011, 2:25 am

When my husband became permanently disabled I finally realized the value of Cobra laws. Even though is was a little expensive, we kept the plan offered by his employer through Cobra. Neither of us would have been approved on an Individual policy at that time. This helped us out so much until I was able to join a group through my next job :-)

Comment from Henry Koning
Time: August 13, 2011, 1:55 am

I retired from kaiser ca and live now in co . They told me I am not eligible for cobra because I changed regions I am a former kaiser employee from kaiser ca can you please explain thank you

Comment from Jessica Howland
Time: August 15, 2011, 6:32 pm

Very helpful information. I wonder if all insurance companies offer the Conversion Plan mentioned as an alternative option to COBRA.

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