The health insurance programs help workers and their families to meet their basic medical needs. These programs can be one of the most important benefits provided by an employer.
Why is COBRA Continuation Coverage Important?
There was a time when group health coverage provided by an employer in danger in the event that an employee was fired, change jobs or divorce. That changed substantially in 1986 when the provisions for health benefits contained in the Consolidated Omnibus Budget Reconciliation Act (COBRA) were adopted. Now, many employees and their families who lose their group health coverage due to serious life events can continue their coverage under the group health plan employer, at least for limited periods of time.
What is COBRA continuation coverage?
Consolidated Omnibus Budget Reconciliation Act ( COBRA ) requires most health plans provide a temporary continuation of group health coverage that otherwise would be finished.
COBRA continuation coverage requires that covered employees be offered, spouses, former spouses and their dependent children when they would otherwise lose their group health coverage due to certain specific events. Those events include the death of a covered employee, cancellation or reduction of working hours of an employee covered by reasons other than serious misconduct, divorce or legal separation of a covered employee, eligibility of a covered employee for receive Medicare benefits and loss of classifying a child as a dependent (and therefore their coverage) under the plan.
Employers may require that individuals who choose continuation coverage pay the full cost of coverage, plus an administrative fee of 2 percent. The required payment for continuation coverage is often more expensive than the amount required to pay the assets employed by the group health coverage because the employer usually pays part of the cost of coverage for employees and all this cost can be charged to individuals receiving continuation coverage. However, payment of COBRA is usually less expensive than individual health coverage. Although mandatory offer COBRA continuation coverage lasts only for a limited period of time. This booklet will try all these provisions in more detail.
How do you get COBRA Coverage?
COBRA is generally applicable to all group health plans maintained by employers in the private sector (with at least 20 employees) or by state and local governments. The law does not apply, however, by the federal government or by churches and certain church-related organizations sponsored plans.
Under COBRA a group health plan is any arrangement that establishes or maintains an employer to provide employees or their families medical care, and whether provided by insurance, maintenance organization health, property of the employer in the form of ” pay per use “or otherwise. For this purpose, “health care” includes:
- Hospital inpatient and outpatient care.
- Attention from a doctor.
- Surgery and other major medical benefits.
- Prescription drugs.
- Dental and vision care.
Life insurance is not considered “medical care” nor are disability benefits; and COBRA does not cover plans that provide only life insurance or disability benefits.
ERISA generally governing group health plans covered by COBRA that are sponsored by employers in the private sector. ERISA does not require employers to establish plans or to provide any type or level of benefits including, but requires plans to comply with ERISA rules, and this in turn gives the participants and beneficiaries who are enforceable rights in court.
Alternatives to COBRA continuation coverage
If you are entitled to elect continuation coverage under COBRA when otherwise lose their group health coverage under a group health plan, you should consider all options you may have for other health coverage before you make your decision. One option could be “special enrollment” in other group health coverage.
If you or your dependents are losing their eligibility under HIPAA for group health coverage, including eligibility for continuation coverage, you may be entitled to special enrollment (registration without waiting until the next open enrollment period) in another group health coverage. For example, an employee losing eligibility for group health coverage may be eligible to enroll in a special way in your spouse’s plan. A dependent losing eligibility for group health coverage may be able to enroll in a group health plan other parent. To have the opportunity for a special enrollment, you or your dependent must have had other health coverage when previously he refused coverage under the plan that now want to join. You or your dependent must request special enrollment within 30 days of the loss of other coverage.
Spouses and COBRA Coverage
If you or your dependent elect continuation coverage under COBRA instead of special enrollment, will have another chance to request special enrollment once you have exhausted the benefits of continuation coverage. To exhaust the benefits of COBRA continuation coverage, you or your dependent must receive the maximum period of continuation coverage available without early termination. You must request special enrollment within 30 days of the loss of continuation coverage.
Another option would be to buy an insurance policy individual health. HIPAA gives individuals who are losing their group health coverage and having at least 18 months of creditable coverage without a break of 63 days or more, the right to purchase individual health coverage that does not impose an exclusion period preexisting conditions. For this purpose, most health coverage, including COBRA continuation coverage is creditable coverage. These special rights may be interested not available if you do not choose and receive continuation coverage under COBRA. For more information regarding your right to purchase individual health coverage, contact your state insurance department.
Also, people of a family may be eligible for health insurance coverage through various government programs, such as insurance plans for people with preexisting conditions (PCIP) and the health insurance program for children (CHIP, for its acronym in English). For more information, contact the insurance department of your state.