If you’ve ever been laid off, you’ve probably received information about COBRA health insurance. It may just seem like more paperwork, but in certain situations, it’s well worth considering. Here are three key things you need to know about COBRA:
What is COBRA insurance?
The Consolidated Omnibus Budget Reconciliation Act (COBRA) was created to enable laid-off employees to choose to continue receiving benefits through their employers’ health insurance plan. However, they are required to pay the premiums themselves. COBRA coverage usually lasts about 18 months, so it’s not a permanent option.
Do you qualify?
If you work for a company employing 20 or more workers, you’re eligible for COBRA coverage when you’re laid off. In most circumstances, you’re also eligible if you quit your job.
However, there are other instances when you also may be eligible for COBRA coverage: Qualified dependents are eligible for COBRA; so is a divorced spouse, providing he or she is unemployed and hasn’t re-married. Another qualifying event is the death of the spouse with COBRA coverage. If you’re completely disabled or eligible for Medicare, you’d also be eligible for COBRA.
If, instead of a layoff, your employer reduces your work hours below the minimum level for group coverage, the company will no longer pay for your health insurance. You would, however, be eligible for COBRA.
How much does COBRA cost?
Employers pay for your health insurance through group plans, but once laid off, you become responsible for your COBRA premiums yourself. You’re still getting the group rate, but the coverage is expensive. Consequently, many people opt to obtain coverage in other ways.
Your health insurance plan’s premiums depend upon how much coverage you had previously, and COBRA typically defaults to the exact coverage of your former policy. Single coverage plans often range from $300 to $500 monthly, and family plans can easily cost $1,000 monthly.