| COBRA is an acronym, which stands for Consolidated Omnibus Budget Reconciliation Act of 1985. Under this federal law, you are provided with a “back-up” system in a time of need, when you aren't currently covered by insurance for a variety of reasons.
This law was put in place to protect your right to continued health insurance, after a circumstance occurs which would otherwise leave you without coverage.
Some of those circumstances:
-involuntary loss of employment (lay off, downsizing, terminated)
-voluntary termination of employment (you quit)
-marital separation or divorce
-if you were a dependent on your guardian/parent’s policy, and you become ineligible (no longer dependent), due to age or no longer attending college
-if your spouse (who is the employee with the insurance coverage) dies
COBRA allows you to have the same coverage you had prior to the event/circumstance. The one thing to take note of is that your continued health benefits will only last for a specific amount of time, and will be entirely at your own cost. Under most cases, the time frame for continued coverage lasts 18-36 months.
A quick example:
You are currently employed, and your company pays for 50% of your insurance premium. You are included in a downsizing effort by your employer, and receive notice of termination. You can opt for COBRA, which will allow you to continue coverage. Instead of the 50% you had prior to termination, you will now be faced with 100% of the insurance premium cost. In some cases, this might be even higher, with the added cost going to administrative fees charged by your ex-employer. As mentioned above, the time frame can be anywhere from 18-36 months. |
