What Does COBRA Insurance Mean?

By Cathy Wilson Posted in Health Insurance News



In 1985 Congress passed the Consolidated Omnibus Budget Reconciliation Act which, in part, mandated employers to continue to provide employees with some type of health insurance after leaving their job. Essentially, for a company to claim a tax deduction for their health insurance expenses they need to show that they participate in COBRA. The insurance, commonly referred to as COBRA, is funded by the employers. When someone leaves a job, voluntarily or involuntarily, they are able to continue to have their medical coverage, typically at a much higher cost.

Who Is Eligible

Everyone who has a job is eligible to participate in this program. You do not need to sign up until after you have terminated your employment with the company. COBRA insurance is not indefinite and once you find employment elsewhere you will be required to cancel your COBRA insurance.

Any employer with twenty or more employers is considered a qualifying employer. This does not pertain self-employed people, obviously. There are three events that qualify someone for COBRA, first, the death of the insured employee. This would pertain to any family members covered under their policy at the time of their death. So if a woman dies of a heart attack and she carried the insurance for her husband and three children then they would be eligible for COBRA. Another qualifying event is the involuntary termination of an employee or a reduction in hours resulting in the lose of benefit eligibility. Divorce is also considered a qualifying event for COBRA coverage.

How Long Will It Last

COBRA will continue up to eighteen months after you leave the job, up to twenty-nine months if the Social Security Administration deems you disabled and up to thirty-six  months in the event of a divorce. You could face serious trouble if you continue to carry your COBRA insurance once you find a new job that offers health insurance. Though, in general, the new insurance would be much cheaper than the COBRA insurance.

Related posts:

  1. How Does Temporary Medical Health Insurance Coverage Work?
  2. What Happens To Your Health Insurance If You Get Laid Off?
  3. What Are Employer Obligations When Offering Health Insurance?
  4. I Had Health Insurance From My Employer And Left My Job, What Happens?
  5. What Is A Health Reimbursement Arrangement For Health Insurance?






One Response to “What Does COBRA Insurance Mean?”

  1. Troy says:

    Those who lost their jobs prior to the September 1, 2008 eligibility cut-off date never received any assistance with their COBRA premiums. Many if not most of those same people are not even eligible for COBRA now because their 18 months of coverage has expired. Even those who were lucky enough to receive the subsidy in the first place are starting to loose their coverage and are joining the estimated 50 million uninsured.

    According to a Harvard study, uninsured adults are 80% more likely to die from a traumatic injury than those who have insurance. Currently their are three bills working their way through congress that may offer some relief. For more information on these bills and other options to COBRA, please see our website.

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