As the price of health care costs continues to rise, many Americans aren't able to buy individual insurance policies and must rely on the group coverage they receive from work. But what happens to that coverage should you leave your job or your company goes out of business? Does that policy just evaporate? The Consolidated Omnibus Reconciliation Act (COBRA) is a law passed by Congress in 1985 that gives former employees the option to continue their policy should they cease to be a member of their previous group insurance plan. COBRA was made as an amendment to the Employee Retirement Security Act, a Public Health Service Act designed by the Internal Revenue Code for many of the same purposes as COBRA, to offer a continuation of health care coverage that might have ended.
In this article, we'll take a closer look at COBRA to find out who qualifies and under what circumstances COBRA is available. First, let's find out just how much COBRA can cost you.
What's the Cost?
COBRA was set up to offer temporary coverage to workers, but it comes at a cost. If you choose to enroll in COBRA, you're responsible for your own monthly premiums and out-of-pocket expenses. This can come as a shock since most employers pay for a big portion of health care expenses. It might be costly, but health care is often a necessary expense, and coverage under COBRA is often much cheaper than an individual policy. As anyone with a pre-existing medical condition can testify, any lapse in health insurance can result in long waiting periods or exclusion from coverage entirely. COBRA exists to make sure that lapse doesn't happen.
Nothing about the details of your policy changes, unless you make the changes yourself. You're entitled to the same medical benefits you had while working full-time, like prescription coverage, hospitalization or even dental and vision care. The price of a plan under COBRA varies greatly, because it depends upon the price negotiated between your employer and the insurance provider. It's worth noting that COBRA tacks on a 2 percent administrative fee to the monthly premium. Coverage under COBRA is retroactive (to the date of the qualifying event), and the first payment is due 45 days after you elect to participate in COBRA.