We know the COBRA regulations can be confusing for both employers and former employers. 90% of the confusion revolves around the COBRA notice. We have a
sample COBRA notice you can provide your employer, if you believe you qualify. If you are an employer, you can also amend the notice and give it to your employees. Further help is on our
user board or you can
contact us directly.
What is COBRA?
Federal law requires many employers to offer continuation health insurance coverage to laid-off workers for 18-36 months. Up until recently, COBRA premiums were subsidized up to 65%. Once again, employees must pay the full cost plus an administrative fee. A
brief summary of COBRA. And if you want to download 110 pages, here is the full text of the
Consolidated Omnibus Budget Reconciliation Act. Also read some useful
COBRA definitions
Fines involved
Employers need to be serious about offering their qualified employees COBRA. The excise tax penalty is $100 per day for each day of noncompliance (if there is only one qualified beneficiary in respect to the same violation) to $500,000 or ten percent of the health plan costs in the previous year, whichever is less. Read more about
COBRA fines for non compliance.
How hard is it to qualify for COBRA?
The main requirement is that you lose employer-based health insurance benefits. This may be from:
- A reduction in hours;
- Voluntarily quitting or being downsized;
- A Divorce of a spouse with coverage;
- Legal Separation from a spouse with health insurance coverage;
- No longer qualifying for the Parents ;
- The death of a spouse;
- When a parent loses health insurance;
- A college student turning 22 because the plan only covers up to age 21;
- Someone becoming disabled leaving the workplace; and
- A spouse and dependent children's worker turns 65 and signs up for Medicare.
People that usually don't qualify:
How expensive is COBRA?
The monthly premiums are paid in full, 100% by the employee, plus a 2% administrative fee. From September 1st, 2008 through February 28, 2010 (Read about the
Stimulus), the government was subsidizing 65% of the premiums. Workers who lost their jobs as of June 1 won’t be eligible for a 65 percent federal subsidy.
Those already receiving the COBRA subsidy may continue to pay reduced premiums for up to 15 months, according to the Department of Labor (DOL). Many healthy people simply need
temporary health insurance, which is typically much cheaper than COBRA, if you qualify medically.
Is COBRA the right insurance option for me?
That will depend on your current health and your long term goals. Enroll in COBRA if you can afford it AND: if you are in poor health, over 50, attached to your current doctor, or are on expensive medications. It helps to find out if your health insurance carrier offers conversion policies, so you can
convert your COBRA coverage to an individual plan.
COBRA provides important protection to those with pre-existing health conditions
Healthy individuals may be able to purchase a plan on their own for a lot less money
COBRA may be the right choice for some family members but not all. Review our extensive list of reasons
why to elect COBRA.
You should consider electing COBRA if you are pregnant, over 50, in poor health, or attached to your current doctor. You may not
qualify for COBRA
If you have
pre-existing conditions and can't get individual health insurance, you can review
these options, or enroll in your
state high risk pool. We have also posted information on
domestic partnerships and group health benefits.
How long do COBRA benefits last?
In many cases, After 18 months or extended benefits, your
continuation benefits end. You may still able to get new coverage under
HIPAA, although the prices are generally even higher.
How much are alternatives to COBRA?
If you are in good health, private medical insurance is usually much cheaper, and the benefits also have more limitations.
Healthy individuals may be able to purchase a plan on their own for less than $50 a month if they are young, and want only a catastrophic hospitalization type plan.
COBRA Notices
You have 60 days after you get your Notification to accept coverage and 45 days to make the first payment. Read about COBRA with sample
COBRA notices. Notification of your COBRA benefits is the responsibility of the plan administrator. The plan administrator is supposed to contact you within 44 days of termination but many don't, from oversight or ignorance of the law.
You also might be given a notice under the
Worker Adjustment and Retraining Notification Act (WARN) of 1988, if you worked for an employer with 100 or more employees.
Also read the
February 1999 final regulations, which cover shortfalls in premium payments, relocating, claims payments before enrollment, counting part-time employees, successor employers, Maximum Coverage Period, Family Medical Leave Act and beneficiaries who change their health coverage before a divorce.
Under the Consolidated Omnibus Budget Reconciliation Act, if you don't get a
notice mailed or hand delivered to you (and are qualified), you can either contact a government
investigator, sue in federal court, or both. This might only make sense in case of an accident, premature birth, catastrophic illness or other expensive medical emergency. No one has gotten rich off the $110 per day awarded to former employees of negligent employers. Also look in our
state law directory to see if your state has enacted any
mini cobra laws.
We have reprinted some useful pages about what happens to your benefits after an
employers bankruptcy, health care benefits
after a job loss, work structure changes and your
company plan, and basic
questions and answers.
If you are a senior, get info on
Medicare and COBRA.
