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Ensuring Cobra Doesn't Take A Bite Out Of Your Wallet
By Pat
If you lose your job in Dallas, one of the many questions you'll have is: Will I lose my health coverage, too? If you're an employee at a company that has 20 or more employees, and you leave your group plan for reasons other than gross negligence, then you'll be offered COBRA continuation coverage.
This federal law, known as COBRA (Consolidated Omnibus Budget Reconciliation Act of 1985), fills that important gap for plans for qualified workers, their spouses, and their dependent children so their does not have to stop when they leave their job.
Under COBRA, if you voluntarily resign or are terminated for any reason other than "gross misconduct," you are guaranteed the right to continue your former employer's group plan for individual or family for up to 18 months at your own expense. In most cases, spouses and dependent children are also eligible for COBRA coverage, for sometimes up to three years. However, individual plans - plans you purchase on your own, rather than through work or an association - are not subject to COBRA laws, and once you lose that coverage, you won't be able to get an extension under COBRA.
If offered, should you elect the COBRA continuation coverage option? If you or your family has major health issues, then yes. If you and your family are relatively healthy, then it's wise to compare individual plans, as individual rates are likely to be half the cost of a comparable COBRA group premium or even less.
Group health coverage for COBRA participants is usually more expensive than health coverage for active employees because the employer usually pays a part of the premium for active employees, while COBRA participants generally pay the entire premium themselves.
In addition, keep in mind that one major difference between individual and group health plans is maternity coverage. With individual health plans, that coverage, if offered at all, is extra, while most group plans include maternity coverage. So, if you need maternity coverage, you should compare COBRA rates with the rates offered through an individual plan with maternity coverage.
If you forgo COBRA, any of your qualified family members may elect to continue their benefits under your former employer's plan. And your spouse or any of your children may enroll in COBRA independent of your COBRA election decision.
Even if you work at a small company (20 employees or fewer) that is exempt from federal law, you might not be completely out of luck. Many states have adopted their own laws, sometimes known as "mini-COBRA," that often grant broader rights in determining coverage eligibility.
If your employer has more than
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20 workers, but doesn't offer health coverage, or offers coverage only to certain groups of employees and you're not one of them, you won't be eligible for COBRA even if one of the qualifying events occurs. That ineligibility will include your spouse or children.
Additionally, if your former employer changes its plan for its current employees, you are entitled to receive benefits under the new plan, although the benefits may change. If your employer switches plans, you won't be able to keep the old plan.
And if your former employer offers separate plans (dental, medical, and vision, for example), you and each of your qualified family members may choose to continue any combination under COBRA. However, if your employer sponsors one plan with multiple benefits, you must each elect all the benefits or nothing.
But eligibility isn't the only issue to consider when it comes to COBRA. Cost is a major consideration, too. If you have no pre-existing conditions and decide against COBRA, you should consider buying individual insurance or even a short-term major medical policy to tide you over until you land a new job with health benefits.
The following health plans are subject to COBRA:
- Medical plans.
- Dental, vision, and prescription drug plans.
- Drug and alcohol treatment programs.
- Employee Assistance Plans, known as EAPs, which provide medical care such as counseling or psychological treatment.
- On-site health care, including discount or free medical services.
- Section 125 spending arrangements, also known as cafeteria plans, under certain circumstances.
The following benefits are not subject to COBRA:
- Wellness programs.
- Life, disability, and long term care insurance plans, and medical savings accounts.
- EAPs that do not provide medical care.
If you become unemployed, and even if your employer offers COBRA, you should also take a look at the revolutionary comprehensive individual solutions created by companies specifically for young, healthy individuals. The cost difference between COBRA and an individual policy might be the deciding factor.
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