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COBRA insurance gives workers the opportunity to continue receiving health insurance for themselves and their families after they’ve lost previous group coverage due to termination of employment or other changes in their job status.
COBRA insurance coverage is only temporary, and it only applies under certain circumstances.
COBRA insurance is a result of the federal Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985.
COBRA requires most employers who offer group health insurance plans to temporarily continue to offer that coverage to employees — and to the families of employees — who have been terminated or otherwise had a change in their employment status due to a “qualifying event.”
Businesses with 20 or more employees are generally required to offer COBRA insurance to qualified employees.
Events that qualify someone to receive COBRA insurance are:
Qualified COBRA insurance beneficiaries include:
A child born to or adopted by a covered employee during a period of continuation coverage is also considered a qualified beneficiary.
In certain cases in which the employer declares bankruptcy, retired employees and their spouses or former spouses and their dependent children may be qualified for COBRA insurance coverage.
You may well be required to pay for the continuation of your COBRA coverage, but the amount charged cannot exceed 102 percent of what is charged to those who are still employed and covered under the plan. The additional 2 percent is for administrative costs.
An 11-month disability extension is available to some recipients, but the premium for those months can be increased to 150 percent of what others pay for the plan.
If your employment ends and you are age 65 or older, you may want to consider enrolling in Medicare Part A and Part B (also called Original Medicare).
In this situation, you likely qualify for a Medicare Special Enrollment Period (SEP). An SEP is for people who skipped enrolling in Medicare when they first became eligible because they were covered by an employer-based group health insurance plan.
Your Medicare SEP begins as soon as your employment or your group insurance coverage ends and lasts for eight months. Your COBRA insurance coverage typically ends as soon as you enroll in Medicare.
If you enroll in Medicare during your SEP, you can also enroll in a Medicare Supplement Insurance plan (Medigap). If you enroll in Medigap during a Medicare Special Enrollment Penalty, you will not be penalized with higher premiums.
Medigap plans help cover the out-of-pocket health care costs that Original Medicare leaves behind.
There are 10 standardized Medigap plans available in most states, so it’s helpful to trust a licensed insurance agent to help you compare free plan quotes to find the right policy for your needs.
Christian Worstell is a licensed insurance agent and a Senior Staff Writer for MedicareSupplement.com. He is passionate about helping people navigate the complexities of Medicare and understand their coverage options.
His work has been featured in outlets such as Vox, MSN, and The Washington Post, and he is a frequent contributor to health care and finance blogs.
Christian is a graduate of Shippensburg University with a bachelor’s degree in journalism. He currently lives in Raleigh, NC.
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