What is COBRA Health Insurance?
COBRA is a federal law that allows you to continue receiving health insurance coverage under your current plan after you leave a job. The law is intended to help employees maintain coverage for up to 18 months while they look for a new insurance plan.
You will pay more for insurance under COBRA because you will probably pay the entire cost. While you were employed, your insurance was partially subsidized by your employer. Still, you will probably pay less for insurance under COBRA than if you had to buy coverage as an individual.
COBRA benefits also apply to your qualified beneficiaries. A qualified beneficiary is a family member who was covered by your insurance plan when you left your job. If your spouse or children were covered by your insurance while you were working, you can continue their coverage under COBRA. If you or your spouse gives birth while you are covered by COBRA, your child is also covered.
You are entitled to coverage under COBRA if you leave a job voluntarily or if you are let go for any reason except gross misconduct. You also qualify for COBRA if you lose your insurance because your hours have been reduced.
COBRA also guarantees continued coverage if your family situation changes. If the spouse of an employee loses coverage because of divorce or legal separation, the spouse can apply for continued coverage under the employer's plan.
If you are still working at age 65 and you become qualified for Medicare, your coverage under your employer's plan will change, and your dependents may lose coverage. If this happens, your spouse and other qualified beneficiaries can continue to be covered under COBRA, though you may have to pay for all or part of the cost.
COBRA also applies to the children of an employee when they lose coverage because they are no longer considered dependents. This happens when they reach a certain age or when they leave college. Under COBRA, children can elect to continue being covered by their parent's insurance, but their parent's employer will not contribute to the cost.
You have 60 days to decide about COBRA benefits after you or your dependents lose coverage under your employer's plan. You do not have to make the same decision for all your dependents. If some of your dependents have access to other health insurance options, they can go off on their own, while other dependents stay enrolled in your current plan.
You can continue to be covered under COBRA for an additional 11 months if you become disabled during the first 60 days of your coverage. To qualify for this extension, you must obtain confirmation of your disability from the Social Security Administration.
If you are laid off and decide to continue to coverage under COBRA, expect to pay much more for health insurance than you were paying when you were employed because your employer is no longer paying for part of your coverage. Still, most people find that continuing their insurance under COBRA costs much less than taking out an individual policy on their own.
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