Employer-provided health plans are meant to cover the medical needs of workers and their dependents, and it is often one of the most important benefits provided by a company. However, what happens when the employee is no longer with the employer?
Among other things, the Consolidated Omnibus Budget Reconciliation Act of 1985, or COBRA, ensures that employees have continuation of employer-provided group health coverage when the relationship between the employee and employer ends.
We receive questions regarding COBRA all the time. Here are some of the common ones we’ve seen.
Am I eligible for COBRA?
Full-time employees who lose coverage due to termination of employment or become ineligible for benefits, typically due to a decrease from full-time to part-time hours.
What about my spouse and kids?
Qualified dependents include spouses, domestic partners (if the group plan allows), and children (biological and/or adopted), if applicable.
Are all my benefits eligible for COBRA?
Medical, dental, vision, prescription drug plans, Health FSAs and HRAs will all be eligible for continued coverage. For Health FSAs, you must have a positive account balance when terminating employment, because even though you can continue use funds already in your account through COBRA, you will not be allowed to contribute any new funds.
What if I decide to only continue some lines of coverage on COBRA?
With COBRA, you can. For example, you might choose to have your medical plan covered under COBRA but discontinue coverage for dental and vision, and that would be OK.
How long can I be covered under COBRA?
Federal COBRA offers 18 months of coverage if eligible due to termination or reduction of hours.
How do I sign up for COBRA?
You have 60 days to enroll from either the date of termination or the date that your COBRA notification was mailed out. You must enroll within the 60 day window, or you will lose out on benefits, as gaps in coverage are not allowed under COBRA.
Why is COBRA so expensive?
We hear this a lot, and yes, it is more money than you used to pay for the same coverage, but your health plan, in and of itself, is actually the same cost as it always was. Here’s why:
COBRA requires you, the enrollee, to pay 100% of the premium plus a 2% administration fee, which means that you’re now responsible for the portion of the premium that used to be paid for by your employer. For example, if you used to pay $20 a month for your medical plan, and you now pay about $200 for COBRA coverage, it means that your company used to pay 90% of the total cost when you were an active employee. The cost of your medical benefit actually hasn’t changed; it’s just that the portion your employer used to pay shifts to you under COBRA.
How do I cancel my COBRA coverage?
Members can terminate COBRA coverage at any time by voluntarily requesting termination or simply stop paying premiums.