Post-Employment Health Insurance Option – COBRA

When leaving a job voluntarily or because of attrition, an individual needs to consider how to maintain health insurance coverage. One option is a plan under the Consolidated Budget Reconciliation Act of 1985 (COBRA).

How COBRA Works

COBRA allows a person the right to continue health and dental coverage and/or participation in medical flexible spending accounts in his/her former employer’s insurance program for up to 18 months after employment. The individual must have terminated employment voluntarily or if the reason for termination is not deemed “gross misconduct.” One’s spouse and dependent children also have the potential to be covered under COBRA.

Under COBRA, health benefits are the same as those provided by your former employer’s health insurance plan. Election to participate in COBRA must be made within 60 days of leaving the company, and coverage will begin the month after your last day of employment.

It’s Up to You

One must remember that participation in the COBRA plan is solely the responsibility of the individual, NOT the former employer. Your responsibilities will include:

• electing coverage, completing proper forms, and submitting forms on time
• paying for coverage, which can be up to 102% of the group rate. Former employers contribute nothing for coverage.
• remembering to make payments and paying on time. Payment reminders will NOT be sent to you although you will be given a payment schedule when you first enroll.

Losing Benefits

It is possible that health insurance benefits will be lost under COBRA if:

• you miss a payment
• you fail to make a payment on time
• your former employer cancels the insurance plan for its company
• a beneficiary is entitled to Medicare
• you become insured under a new employer

Before enrolling in a COBRA option, always consult with your financial planner or insurance agent to ensure that you are getting the best possible coverage for your needs and finances.