What is COBRA?

Well, besides a snake, a decent book, and some last names of some famous individuals.  COBRA is a health insurance plan that can protect you.  It is an interesting  fall back plan of health insurance and it is something every individual should know more about.

When you’ve lost your job, besides the loss in income, one of the first roadblocks considered is insurance, especially health insurance. But Job loss isn’t the only thing that causes this worry. What if, your spouse was the one with insurance and you weren’t. A messy divorce may have you worried about insurance. COBRA is a solution for both cases.

COBRA stands for The Consolidated Omnibus Budget Reconciliation Act of 1985.  This law requires many large and small employers to offer employees to continue their group health coverage.  In most cases, this health care coverage can last anywhere from eighteen months to thirty-six, depending on the situation. They will take into account disability, dependents, and spouses.

The COBRA plan would cover anyone who was covered under the plan in the first place.  Even a new child, born while under COBRA qualifies as long as they are added within 30 days of birth or adoption.

Why would you need COBRA?

1.)     You were terminated from your employment.

2.)    You quit your employment

3.)    You lost the necessary hours for the employer to offer benefits

4.)    The divorce or legal separation of a covered employee from their spouse.

5.)    Others

Choosing to start COBRA can be a difficult position. For whatever reason arises that this must be considered, you must remember that you must approve COBRA coverage. It is not automatic. A 60 day time period is given where you may choose to begin coverage. After 60 days, additional discussion must be made with someone involved in your insurance coverage.

Payment must be made within the first month or two after initiating coverage. If the initial payment is not received, within the first 6 weeks of coverage. The insurance may be denied, revoked, or reviewed.

The interesting aspect is that COBRA is not endorsed by any insurance plans. Because it is a law, it is a provision to protect an employee and and employer to allow medical coverage even after something has happened, such as a family change or termination from employment.

The big drawl back from COBRA is price. Typically, because the employer is no longer paying a portion of your health insurance, the cost skyrockets. This has been a real turn off to many number of people. The American Recovery and Reinvestment Act or ARRA has provided some breathing room in the area of cost.

This act substantially reduces the premium offered for COBRA policies. This was largely put into affect a few years ago. It was primarily for those who were terminated. Continued decreases in premiums could go for fifteen months. The deadline was May 31st 2010 and for those who took advantage – additional fifteen months of decreased premiums have been seen.

Overall, health insurance nightmares have largely been avoided, but at a steep price. But for many, this is a good bridge to be used until another source of health insurance could be found. If used for a month, or ten, insurance didn’t lapse and the result of good health coverage and relief can not be measured. Learning about COBRA in any circumstance is helpful, you never know what will happen in the future.

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