Lost Your Job? Cobra Can Help

The Consolidated Omnibus Budget Reconciliation Act (COBRA), passed in 1985, works as a stabilizing force for families when the primary breadwinner loses his or her job. The unemployed can continue carrying health insurance despite the loss of employment. Unexpected medical expenses can cripple an already struggling family.

COBRA was signed into law by President Ronald Reagan as part of a package addressing concerns dealing with many government concerns, but the health insurance component has certainly been more utilized and appreciated by tax payers. Title X in the bill addresses the health insurance needs of the unemployed.

What is Title X?

Title X addresses loss of employment for reasons such as lay off, resignation, or medical leave. The bill also addresses the needs of families in other situations where there is a loss of health insurance such as the death of a household member, separation or divorce.

Who Can Apply for COBRA Health Insurance?

There are situations in which COBRA health insurance regulations do not protect the employee. For instance, employees who are terminated for gross misconduct will not qualify. Otherwise, employees should be eligible for COBRA continuation of coverage as long as the employer has 20 or more employees. Otherwise, the business is not required to offer the benefit. When the business has many part time employees, there is a formula for calculating the number of employees based on the total hours worked by all part timers.

How COBRA Health Insurance Works

The cost of COBRA health insurance is covered by the employee, but at the same discounted rate offered tot eh employer. The law mandates a continuation of the same coverage employees enjoyed while working, which may include coverage for spouses and dependents. In exchange for continuing to offer coverage, employers receive tax credits.

COBRA coverage typically is offered for 18 months. But in cases where the breadwinner passes away, the family may be covered up to 36 months.

Why Purchase COBRA Coverage?

Typically, the group rates offered under an employer are cheaper than individual rates for which the employee would qualify. There may be situations where the employee can find more affordable health insurance coverage, so it is wise to check prices before signing on for COBRA continuation of insurance. You only have 60 days to opt-in for coverage, so it is important to act quickly.

What Other Options are Available?

The American Recovery and Reinvestment Act of 2009 has offered some relief to employees who cannot afford to pay for COBRA coverage. The law allows those laid off between September 1, 2008 through December 31, 2009 to purchase the insurance at a reduced rate. Those eligible will pay 35% of the premium for up to nine months.

Starting 2014, the Patient Protection and Affordable Care Act of 2010 gives employees an additional option. Health insurance exchanges may be available for employees to seek more affordable coverage. It is not yet clear how much control the new law will impose upon states in offering health insurance exchanges as many court battles are underway to address states’ rights and the desire of many states to withdraw from this part of the program.