TECHNICAL GLOSSARY

COBRA Insurance: What You Need to Know

An insurance product called COBRA was created under the Consolidated Omnibus Budget Reconciliation Act and provides for continued employer sponsored health insurance for eligible workers and their dependent family members when the worker leaves his or her employment or undergoes other qualifying events that result in a loss of coverage. With COBRA, workers will be able to keep their existing health insurance until they find a new job but will have to pay 100% of their COBRA premium out of pocket.
COBRA is most beneficial to employees of small businesses, self-employed individuals or independent contractors, and employees of medium-sized businesses who may experience a temporary lapse in coverage due to the loss of employment.

How Does COBRA Insurance Work?

COBRA policy starts due to specific qualifying triggers that are generally limited to the following occurrences:

• Employer terminating their employment (either voluntarily or not)
• Reduction of hours resulting in loss of health coverage eligibility
• Divorce or separation of a spouse who was covered under an employee's health plan
• Death of an employee who had coverage under a health plan
• Employee who has recently become eligible for Medicare

Notice Requirements

An employer must notify eligible employees in writing about their COBRA rights and how to elect COBRA coverage. Once notified, the employee has 60 days to elect to continue their benefits under COBRA.

Premiums and Costs to Enroll Under COBRA

As the employee elects COBRA, they are responsible for paying the entire premium that includes both what was being paid by their employer plus their share of the premium prior to electing COBRA.
Individual premiums range from $400-$600 per month. Family premiums range from $1,000-$1,800 per month. Premiums do vary from one health plan to another as well as based on geographic location and family size/number of dependents.

Length of Time Coverage Will Be Provided Under COBRA

The length of time an employee can keep their COBRA benefits is based on the qualifying event that was the cause for the election to continue their coverage under COBRA:

1. Terminated Employment /Reductions in hours - COBRA coverage for up to 18 months
2. Divorce/legal separation - COBRA coverage for up to 36 months
3. Disabled individual – 11 months extension for a maximum total of 29 months

Benefits to Employees Who Elect COBRA

1. Continuity of Care/Accessibility to Providers
2. Continues the same medical insurance after being terminated
3. Avoids gaps in medical insurance coverage while searching for a new job or changing jobs (if necessary)