Just because you are fired or laid off from your place of employment does not mean that your health insurance coverage is automatically ended concurrently. COBRA stands for the Consolidated Omnibus Budget Reconciliation Act of 1986. Employees who voluntarily resign from their position or were terminated for any reason other than gross misconduct may receive group health insurance in-between jobs under the federal laws of COBRA. COBRA allows for these members to temporarily receive health insurance coverage. Full and part time employees are eligible for COBRA coverage. The employee, employee’s spouse or employee’s dependent must have already been a part of a health plan prior to employment termination. Additionally, there must have been an event that caused the heath insurance coverage to stop including employment termination, divorce or a legal separation of a prior insured employee.
The employee is covered immediately after employment termination and is covered for a period of 18 months while the spouse and dependents of the employee may be covered up to 36 months after the employment termination. These time periods may be reduced if payments are late, the employer terminates the group plan, the prior employee beings to receive coverage from another employer, or if the prior employer is covered under Medicare.
An employee is covered if they were terminated for reasons other than gross misconduct or if their employment hours were reduced. Spouses of employees are eligible and covered under COBRA if their spouse was terminated from employment for reasons other than gross misconduct, their spouse’s work hours were reduced, the covered employee became eligible for Medicare coverage, the covered employee died, or the spouse and covered employee were divorced. The dependents of covered employees are eligible for COBRA coverage if there is a loss of dependent coverage statutes, employee was terminated from employment for reasons other than gross misconduct, the employee’s work hours were reduced, the covered employee became eligible for Medicare coverage, the covered employee died, or the spouse and covered employee were divorced
COBRA covers employees that were previously covered in an employer’s insurance plan and usually covers dental, medical, and employee assistance plans. COBRA coverage does not automatically begin after termination of employment. The prior employer must notify the health plan administrator thirty to sixty days after the employee was unemployed. The employee, spouse and dependents then have the option to purchase COBRA health insurance during an election period of sixty days. If employers fail to notify plan administrators of employee’s unemployment, they may face fines and damages. Additionally, if an employer does not offer health insurance or goes out of business, the employer is not required to offer COBRA continued coverage insurance.
As for payments, COBRA beneficiaries do not pay more than those employees that are not covered by COBRA of the same group plan for health insurance coverage. However, they do pay an additional fee up to two percent for administrative costs. The beneficiaries that are receiving an eleven month disability extension may be required to pay up to 150 percent of the non-COBRA beneficiary cost of coverage. Also COBRA premiums may increase if the costs of the group plan increases but they must be fixed in advance of a twelve month cycle. Premiums are due on a set date and must be paid without a thirty day grace period for payments. Also beneficiaries have forty five days after COBRA election to pay the first premium. If the payment is not paid the plan may cancel coverage until payment is received.
