How to Use COBRA to Keep Your Medical Coverage

5 Need-to-Know Facts about COBRA and Medical Insurance

COBRA is a 1985 insurance act by the United States Congress. It states that certain ex-employees of a company are entitled to continuing medical insurance through that company, whether that customer quit or was fired. C.O.B.R.A. stands for the Consolidated Omnibus Budget Reconciliation Act.

When you leave a job, your former employer is required to inform you within fourteen days that you are entitled to COBRA benefits. You are allowed to continue your medical insurance for up to 18 months after you leave the job.

You’ll have to pay for this coverage–not the former employer. The advantage is you are purchasing this insurance at the bulk rate the company does, meaning you are paying for insurance at a much lower rate than if you were purchasing this on your own.

COBRA is intended to act as a bridge for those who are transitioning from one job to another. It is meant for other transitional periods in the families of employees, such as those caused by death, divorce or child growing up.

The Employer

How To Use COBRA to Keep Your Medical CoverageThis law covers any employer with twenty or more employees. This sort of business must inform departing employees or the otherwise qualified that you have this option.

What Are the Costs?

You pay the entire cost of the insurance. You also pay a 2% administrative fee. Fortunately, this is payed at a group rate.

Who Qualifies For COBRA?

This applies not only to employees, but the dependents of an employee. People must be covered in what strangely is called a qualifying event. Here are those events.

1. If an employee’s service is terminated, that employee is covered under the COBRA act.

This involves layoffs, strikes and lockouts, as well as cases where a person is discharged or resigns. COBRA includes cases where a person goes on medical leave.

2. If an employee faces a reduction in working hours, that person is covered.

This includes when there is a slowdown in business and that business starts to reduce hours.

3. If an employee dies, that person’s dependents qualify for the COBRA coverage.

4. If an employee is involved in a divorce, that employee’s ex-spouse can maintain insurance up to 18 months through the COBRA act.

5. If an employee’s child reaches the age when the child is no longer covered, COBRA extends the length of coverage by a year-and-a-half.

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