Today’s economy has produced a vast change in the employment landscape. Nearly every day we hear about another company that has gone under or downsized, leaving hundreds or even thousands of employees jobless.
Most people who have lost their jobs have also lost access to their health insurance. To many people this can be devastating, as individual policies are often expensive and hard to find, and require a great deal of paperwork and health exams in order to qualify.
One option is for employees to continue their current health coverage through the Consolidated Omnibus Budget Reconciliation Act (COBRA). The Act was established in 1985 and provides a way for employees to temporarily retain company-sponsored health care benefits after they’ve lost or changed jobs, had their hours reduced or had a major life event.
Employers who have at least 20 employees and offer health insurance must offer COBRA to employees who leave or are terminated.
When employees elect COBRA, they are allowed to keep their existing group health insurance coverage, so no changes are necessary with regard to doctors or pharmacies.
In addition, since the former employer usually handles the administrative aspect, there is no additional paperwork involved. And, since coverage remains the same, there are no additional medical exams necessary to determine the employee’s current health condition.
Although COBRA offers an easy and convenient way to retain health insurance coverage, there are a few factors to keep in mind.
The coverage is considered temporary, meaning that COBRA benefits will run out after 18 months. At that time, the employee will need to shop for another health insurance policy if he or she has not found new employment that offers insurance benefits.
Those who may best benefit from COBRA are those who have pre-existing conditions and may not immediately qualify for another health plan, or those who will join another group health insurance plan with a new employer within the 18-month COBRA time frame.