Tuesday, December 17, 2013

COBRA Health Insurance - What You Need To Know

COBRA health insurance is an area of insurance law that suffers from a certain degree of uncertainty and yet this law will affect the lives of many Americans at some point in their lives. This is not an obscure law that only affects a small number of people in limited special situations. COBRA (or the Consolidated Omnibus Budget Reconciliation Act of 1986) amends the Employee Retirement Income Security Act, the Internal Revenue Code and the Public Health Service Act to provide continuation of group health coverage that otherwise might be terminated.

According to the US Department of Labor; COBRA provides certain former employees, retirees, spouses, former spouses, and dependent children the right to temporary continuation of health coverage at group rates. This coverage, however, is only available when coverage is lost due to certain specific events. Group health coverage for COBRA participants is usually more expensive than health coverage for active employees, since usually the employer pays a part of the premium for active employees while COBRA participants generally pay the entire premium themselves. It is ordinarily less expensive, though, than individual health coverage.

Generally speaking, if you are an employee at a company that has 20 or more employees and you leave your group health plan (or your group health plan terminates for some reason) for some reason other than gross negligence then you will be offered COBRA continuation coverage (There are also provisions for spouses and dependent children).

Practically speaking; should you elect the COBRA continuation coverage option? If you or your family has major health issues then yes. If you and your family are relatively healthy then you will probably want to compare individual health insurance plans as individual rates are approximately half the cost of a comparable COBRA group health insurance premium. (Hint: One major difference between individual health plans and group health plans is that with individual health plans you usually have to pay extra to receive maternity coverage where on most group plans maternity coverage is included. If having maternity is a necessity then be sure and compare the rates offered to you by COBRA with the rates offered from an individual plan with maternity coverage to get a true apples to apples comparison.

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