20. March 2019 12:31
by John

11 Things You Should Know About Cobra Health Insurance

20. March 2019 12:31 by John | 0 Comments

What you don't know about COBRA could come back to bite you.

If you've lost or left a job and have employer-sponsored health insurance, you'll likely be offered something called COBRA. This extends your employer-sponsored health insurance for a period that typically lasts 18 months.

Here are 11 things you should know about COBRA coverage:

1. What is COBRA?

COBRA is a federal law designed to let you pay to keep you and your family on your employer-sponsored health insurance for a limited time after your employment ends or you otherwise lose coverage.

2. What does COBRA stand for?

COBRA is an acronym for the Consolidated Omnibus Budget Reconciliation Act, the federal law that also amended ERISA to enable temporary health insurance for people who have lost or left their jobs. The law took effect in 1985.

3. Who is eligible for COBRA?

People who qualify for COBRA include employees who have voluntarily or involuntary lost their jobs, had their work hours reduced, are transitioning between jobs, or have experienced a life-changing event such as a death or divorce. This coverage is available to covered employees, their spouses, their former spouses, and their dependent children. Each year, about 3 million individuals and families use COBRA benefits.

4. How will you learn about your COBRA eligibility?

You'll receive a letter from the employer or the health insurer outlining your COBRA benefits.

HR director at Seattle-based real estate developer Geonerco Management, warns that the six-to eight-page letter can be difficult to understand “because it contains all manner of mandatory government language." If you're having trouble deciphering that language, contact the employer's HR department or the insurer.

5. Which employers are required to offer COBRA?

Generally, COBRA requires that group health plans sponsored by employers with at least 20 employees (in the previous year) must offer employees and their families the opportunity to temporarily extend their health insurance in circumstances like the ones outlined above. State and local government agencies also fall under the COBRA umbrella. Some states have COBRA-type laws that apply to employers with fewer than 20 employees.

6. Which employers are not affected by COBRA?

The law does not apply to health insurance plans sponsored by the federal government, churches, and certain church-related groups. However, federal employees are covered by a law similar to COBRA.

7. How much does COBRA cost?

The cost depends on how much insurance coverage you received from your previous employer. If you decide to accept COBRA coverage, you'll pay up to 102 percent of the insurance premiums, including the portion that your employer used to pay. In 2012, the average COBRA premiums for a family plan totaled $15,745, plus the 2 percent fee.

For some, the steep increase in financial responsibility that accompanies a COBRA plan is not always realistic—especially when unemployed. The Affordable Care Act marketplace offers alternative coverage options that can be “a lot cheaper, particularly with tax credits,” says Ivan Williams.

8. What sort of benefits will you get under COBRA?

Once you choose COBRA coverage, you retain the same rights as an employee who remains with the employer sponsoring the insurance, Szymanski says. “That means that you must go through open enrollment, which may change insurance companies, benefits offered, pricing and coverage," he says.

9. What are some alternatives to COBRA?

If you reject COBRA coverage, your health coverage options include your spouse's health insurance plan, the federal government's health insurance marketplace, your state's health insurance marketplace, the government-backed Medicaid program, or a short term medical policy designed for gaps in health coverage. These alternatives may or may not cost less than COBRA coverage, so it pays to weigh all of your options.

One option that Szymanski doesn't recommend: skipping health insurance altogether. “Electing to go uninsured is almost always a very unwise decision, with lots of potentially catastrophic downsides and very little upside," he says.

10. What if you change your mind and decide you want COBRA?

If you are entitled to elect COBRA coverage, you must be given an election period of at least 60 days. If you decline COBRA coverage during the normal 60-day decision period, you must be allowed to rescind your coverage waiver. However, you must reverse your decision during that period, and your final decision will become permanent after the 60-day window closes.

11. What happens if you miss a COBRA payment?

Szymanski cautions that you must pay premiums (usually via monthly checks sent by regular mail) in a timely manner (often a grace period of 30 days) or your coverage will be canceled.

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11. December 2017 12:58
by Nicki

COBRA: One of Health Care’s Comfortable Commodities

11. December 2017 12:58 by Nicki | 0 Comments

With summer break upon us, most of us are reminded that home has its perks. Think back to your spring break vacation … Maybe you were stuck at the airport with your kids when their devices ran out of power. Or, maybe you spent hours in the car taking direction from a computer-generated voice telling you to turn in 0.5 miles. Every year, we crave an escape from our daily routines. Then, halfway through our vacations, we yearn for the comforts of home.

Now, take a moment to equate your last family travel experience with the current state of healthcare regulation. The Affordable Care Act (ACA) may have brought the change that some were craving, but the environment has now become a bit chaotic. Instead of craving change, we want reliable routines.

Fortunately, we still have COBRA. COBRA feels comfortable, sort of like home. With COBRA, you know what to expect. You mostly know the rules and how they will be applied. At one time, you might have been overwhelmed by COBRA concepts like qualifying events, applicable premiums, or election notices. However, now that you’ve made it through ACA compliance, COBRA administration is as easy as pie.

Now, you are COBRA-confident. You’ve got this. And, even if you don’t, the basic refresher below will bring it all into focus …

What is COBRA?

COBRA is the continuation of group health insurance by a qualified beneficiary who loses coverage due to a qualifying event. The qualified beneficiary must pay 102% of the cost of coverage.   

What Plans are Subject to COBRA?

COBRA applies to group health plans that provide medical care and are maintained by an employer. Examples of plans subject to COBRA include health plans; dental and vision plans; cancer (disease-specific) policies unless they are completely voluntary, employee-pay-all; prescription drug plans; health FSAs; HRAs; drug or alcohol treatment programs; wellness programs that offer physical exams, cholesterol screening, flu shots and nutrition counseling. 

Who is Eligible to Elect COBRA?

Qualified beneficiaries who are covered by a group health plan immediately before a qualifying event are eligible to elect COBRA. Qualified beneficiaries include a covered employee (including retirees, independent contractors, partners of a partnership – basically anyone provided coverage because they are performing or have performed services for the employer).  Qualified beneficiaries also include the spouse and dependent child of a covered employee.

What Triggers COBRA?

COBRA kicks in upon the occurrence of a qualifying event if that qualifying event causes a loss of coverage under the group health plan. There are seven qualifying events: (1) termination of the covered employee’s employment (other than for gross misconduct); (2) reduction in the covered employee’s hours of employment; (3) death of the covered employee; (4) divorce or legal separation from the covered employee; (5) ceasing to be a dependent child under the terms of the plan; (6) the covered employee becoming entitled to Medicare; and (7) the employer’s bankruptcy (only for retiree plans). 

Remember, the qualifying event must cause a loss of coverage. A loss of group health plan coverage means “to cease to be covered under the same terms and conditions as in effect immediately before the qualifying event.” This encompasses much more than simply losing group coverage entirely. For example, suppose a company has two plans for employees at different locations and the premiums are higher at one location. If an employee is transferred to the location with the more expensive plan and no longer qualifies for his or her current plan, the qualified beneficiaries have a COBRA right under the old plan.

What is the Maximum Duration of COBRA Coverage?

Generally, COBRA lasts for up to 18 months if the qualifying event is a termination of employment or a reduction of hours. COBRA can last for up to 36 months upon the death of an employee, divorce or legal separation, child’s loss of dependent status, or an employee’s entitlement to Medicare. COBRA for a disabled qualified beneficiary can extend up to 29 months. Finally, retiree coverage that terminates due to the employer’s bankruptcy can lead to COBRA for the life of the retiree plus 36 months for the spouse after the retiree’s death. If the retiree is not living when the bankruptcy occurs, but the surviving spouse is covered by the plan, the spouse gets COBRA for life. Keep in mind, there are many ways that COBRA can end early such as due to nonpayment of premiums. 

What COBRA Notices and other Plan Disclosures are Mandatory?

Notification drives COBRA. Some of the notices and communications that are mandatory include: the initial (General) notice; the election notice; the notice of unavailability of COBRA coverage; the notice of early termination; the notice of COBRA premiums short by an insignificant amount; open enrollment materials; individual conversion policy notices; summary plan descriptions; summary of benefits and coverage; summary of material modifications, and; a notice of change in COBRA premiums.

Just the Beginning

This basic refresher gets you through the front door, and comfortable with daily NEW LIFE INSURED routines. But like any home, NEW LIFE INSURED has its own nooks and crannies. If you venture into the basement or attic, you may encounter some scary topics including premium calculations, coverage terminations in anticipation of qualifying events, deadline calculations, notice contents, and let’s not forget Medicare! When these things come up, don’t go it alone. 


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