Approximately half of all Americans receive health insurance coverage for themselves and their families through a group health plan provided by an employer. However, certain circumstances, such as a change in job or marital status, may put your health coverage at risk. Fortunately, the Consolidated Omnibus Budget Reconciliation Act, also known as COBRA, allows you to extend health benefits for you and your family after a qualifying event, such as a divorce or a job loss, for a limited amount of time.
You might not ever think about COBRA until you experience a qualifying event in which you may need it. Therefore, you may not know what it can do for you or how to use it. The following are some essential things to know about COBRA.
- Coverage is temporary
Continuation coverage under COBRA is not meant to last forever. Rather, its purpose is to bridge the gap in coverage that may occur after a qualifying event until you have the opportunity to obtain new, permanent coverage. Depending on the qualifying event, your coverage under COBRA may continue for 18 to 36 months. Under certain circumstances, such as a second qualifying event, it may be possible to extend the term longer.
- You have to opt in
You do not receive COBRA benefits automatically. Rather, you have to elect to receive coverage. This involves filling out paperwork from your insurance company. It is the responsibility of you and/or your employer to inform the insurer of the qualifying event and receive the necessary paperwork to elect coverage. The insurance company may have specific procedures in place for accomplishing this.
- Continuation coverage under COBRA is not free
The law allows your group health plan administrator to charge you a premium for the continuation coverage that you elect to receive under COBRA. There are limits as to how much the plan can charge you for continuation coverage, but it is often more than you paid in premiums before the qualifying event.