COBRA is also known as the Consolidated Omnibus Budget Reconciliation Act. It is a health insurance program that is available to eligible employees and their dependents. It gives continued benefits of health insurance coverage when a person loses their job or they undergo a reduction of work hours.

If you have recently become unemployed, then COBRA could end up being a great option for you. 

In this article, we will go into the basic details of COBRA insurance, how the program works, and its pros and cons. So make sure to keep on reading to learn more!

What Is COBRA Continuation Coverage?

Large companies in the United States need to provide health insurance to their employees. They need to pay a portion of insurance premiums. If the worker is no longer eligible to receive an employer's health insurance benefits, the employer might stop paying its share of the worker's health insurance premiums.

When this happens, the employee and the employee's dependents can use COBRA to keep the same health insurance coverage for a limited period of time. The employee needs to be willing to pay for the insurance on their own, however. 

With COBRA, a former employee, spouse, former spouse, and children need to be offered the chance to have continued health insurance coverage at group rates. While these people will likely pay more money for health insurance, the COBRA coverage could end up costing less money than an individual health insurance plan would.

It is important to point out that COBRA is a health insurance program. So plans might cover costs toward vision care, dental treatments, and prescription medications. It doesn't include disability insurance or life insurance. 

Qualifying for COBRA Health Insurance

There are various sets of criteria for different employees and other people who might be able to receive COBRA coverage. In addition to meeting the criteria, eligible individuals can usually only get COBRA coverage after certain qualifying events. 

Companies with at least twenty employees will usually need to offer COBRA coverage. An employee who is eligible for COBRA needs to be enrolled in an employer-sponsored group health insurance plan on the day before the qualifying event occurs. 

The insurance plan needs to be effective on more than half of the company's usual business days in the previous year. The company needs to keep offering its current employees a health insurance plan in order for the departing employee to qualify for COBRA insurance. 

If the company is going out of business, then the departing employee might not be eligible for COBRA insurance. 

The qualifying even will need to come from a loss of the employee's health insurance. 

COBRA Benefits and Available Coverage

For candidates who qualify for COBRA, the rules of the program will provide for the offering of coverage that's the same that the company offers. Any change in the plan benefits for current employees will also apply to beneficiaries. 

All beneficiaries of COBRA will need to be allowed to make the same choices as beneficiaries who don't use COBRA. Basically, the health insurance coverage for current employees is exactly the same as former employees under COBRA. 

From the date of your qualifying event, COBRA insurance coverage will extend for a limited period of 18 to 36 months. 

Cost of COBRA Health Insurance

During the term of employment, the company usually pays a significant part of the health insurance premium. The employee then pays the rest. 

After employment, the individual needs to pay the whole amount. At times, it can even come with additional administrative fees. 

This means that the cost for the individual might increase despite group rates being available. To put it another way, the cost of health insurance will be the same, but now the individual is responsible for paying a bigger portion. 

COBRA can still cost less than other individual health insurance plans. You also might qualify for a subsidy under the Affordable Care Act.

Some COBRA beneficiaries can have their premiums covered by the government during the coronavirus pandemic. 

Pros and Cons of COBRA Coverage

A person who decides to take advantage of COBRA coverage will be able to continue seeing their same doctor. They will also get to keep the same medical network providers and health plan.

A beneficiary of COBRA can also retain their existing coverage for any preexisting conditions. The cost of the plan might be less than other standard plans.

It's also better than remaining uninsured. This is because you'll have protection against high healthcare bills that need to be paid for in case of illness. 

However, it's also important to understand the cons of COBRA. For example, when the individual needs to pay for their health insurance plan, it can end up costing a good amount of money. And if the company stops offering coverage, the former employee will lose their access to COBRA. 

Because of this, people who are eligible for COBRA need to weigh the benefits and downsides of COBRA. 

The Importance of Knowing About COBRA Insurance

Hopefully, you now have a better idea of how COBRA insurance works. As we can see, COBRA insurance can be extremely helpful as a short-term insurance solution. Especially for people who have recently become unemployed.

It's important that you weigh the cost of COBRA against individual plans to get a better sense of what is best for you.

Are you looking for help finding your optimal insurance plan? Contact us today and see what we can do for you!

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