When you think about losing your job you may also think about losing your health insurance. Fortunately, through a federal law known as COBRA (Consolidated Omnibus Budget Reconciliation Act) there is some hope. Cobra Medical Insurance serves as a safety net allowing you to keep your insurance for 18 months if your employer cuts your hours, you lose your job, or you voluntarily leave your job. While this gives you some hope there are some things you need to know here.
Longer Coverage Periods
It’s possible to keep this coverage for you and your dependents for up to 36 months if you become eligible for Medicare or get divorced. Your spouse and dependent children are also eligible for up to 36 months if you die or your child is no longer dependent upon you.
Cancellation of Coverage
If your former employer completely drops group health insurance coverage or goes out of business they can cancel your Cobra Medical Insurance. This is because they no longer have a health plan that they can continue. This can also happen if the company reduces its employees to fewer than 20 people.
Moving Outside the Coverage Area
When you lose your job then accept a new one in another state you’ll still be covered by COBRA but you may not be able to find any doctors in your area who accept your insurance. This is because you’re required to use local provider networks. Your employer doesn’t have to offer you a plan in your new area.
Paying for Premiums
Another major consideration with COBRA is its cost. According to the law, you can be charged 100% of the premiums along with a 2% administrative fee. This is different from when you worked for your employer because then they’d typically pay for more than half of your premiums. Considering that it costs over $20,000 for most employer-sponsored family health plans, COBRA can be really expensive. You may be able to find more affordable health care plans by searching through the Affordable Care Act marketplace or looking for a short-term health plan to participate in.
The Bottom Line
COBRA is a great thing to have when you lose your job. However, you need to understand that this is merely a safety net. There are many factors that will impact your coverage. Taking note of these things is important if you don’t want to be left without healthcare coverage.
