If you’re a dangerous snake owner, you probably already realize that … oh, you mean COBRA, the acronym, not cobra, the poisonous snake? My mistake.
COBRA, the acronym, stands for Consolidated Omnibus Budget Reconciliation Act, and now you can see why people just call it COBRA. While COBRA does a lot of things, it does one really important thing: COBRA allows some employees to keep their employer-sponsored health insurance. COBRA itself is not a health insurance plan; instead, it is the set of rules that dictates continuing health insurance coverage.
This was a big deal back when COBRA became law in 1986. Back then, the private health insurance market was a pain to navigate for two main reasons:
Your rates were based on your health and companies could choose not to cover pre-existing conditions.
There were no laws that required health insurance to cover certain conditions or procedures.
This made it really hard to get a good health insurance plan if you were fired, changed jobs, got divorced, or otherwise went through a life change that put your group coverage at risk.
The Affordable Care Act (ACA), which became law in 2010, completely overhauled the private health insurance market. Private health insurers could no longer base rates on an individual’s health and they had to cover pre-existing conditions. Additionally, the law mandates that every health insurance plan needs to cover ten essential benefits, providing a federally-mandated minimum amount of coverage for all health insurance plans.
However, sixty percent of Americans still get healthcare coverage through their employer, and despite the ACA, COBRA is still a vital part of the American healthcare system.
How do I know if I'm qualified to receive coverage under COBRA?
Almost every business that has more than twenty employees is required to offer continuing coverage to employees and dependents, including most government organizations. COBRA applies not only to the employee covered by the group plan, but to spouses, former spouses, and dependent children as well. Some events that may trigger a continuation of coverage under COBRA include termination or reduction of hours for any reason other than gross misconduct, divorce or legal separation from the covered employee, the employee becoming entitled to Medicare, and a child losing dependent status.
If you’re interested in continuing coverage under COBRA and you want to know if your company is required to offer it, your best bet is to contact your HR department directly.
How much does coverage cost under COBRA?
If you elect to continue your coverage under COBRA, you must pay the full price of the plan plus a two percent administrative fee. Because employers often subsidized health benefits, this may end up being much more than you are used to paying every month.
Do I have other coverage options?
If you’re losing your health insurance coverage because you’re leaving your job or your spouse, you trigger what’s called a Special Enrollment Period. Special Enrollment Periods allow people like you to shop for health insurance on the marketplace outside of regularly scheduled enrollment periods.
We suggest looking on a healthcare marketplace to make sure that you’re not overpaying for coverage.
Be aware, however, that a Special Enrollment Period is not triggered if you elect to discontinue your COBRA benefits or stop paying for them. Special Enrollment Periods only cover involuntary interruptions of health insurance coverage.
If you need health insurance but don’t qualify for a special enrollment period, you may want to check out short-term health insurance. A short-term health insurance policy can cover the period before your next job starts or open enrollment beings. They tend to be cheaper than regular insurance, but they’re more limited in what they cover, and they usually deny applicants with health problems.
Do I even need health insurance?
Yes. I don’t even need to get out my salesperson lingo or any stats and figures to try to convince you to buy health insurance because, thanks to the ACA, there’s a health insurance mandate. If you don’t have health insurance, the federal government will charge you a fee. You can see this year’s fee for not having health insurance here.
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