You may have lost your job, but you may be eligible to keep your health insurance coverage. The Consolidated Omnibus Reconciliation Act (COBRA) allows many employees to continue their coverage after losing their jobs for up to 18 months.
If your company has 20 employees or more, you probably qualify to continue health insurance coverage under COBRA. Depending on the state in which you work, you may also qualify for continuing coverage if your company has fewer than 20 employees. COBRA covers employees who quit, retire or are terminated for anything but “gross misconduct.”
Eighteen months of COBRA coverage is available to the employee, and often to the employee’s spouse and dependent children. The coverage is also generally available to spouses and dependent children in the event of the employee’s divorce or death for up to three years.
You’re covered – that’s the good news. The bad news is that COBRA coverage can be expensive. In addition to the portion of insurance premiums that have been regularly deducted from their pay, employees on COBRA are required to pay their employer’s portion of the health care coverage and an administration fee up to 2 percent. For many families, that can mean hundreds of dollars every month.
So, how do you determine if it is worth it to pay those costly COBRA premiums? The following questions may help determine what is right for you:
- How fast are you starting a new job? Workers are given 60 days to elect if they want COBRA coverage, and during those two months are still covered by their former employer’s health care plan. If the employee doesn’t use the medical plan during that time frame, he can opt not to take COBRA coverage.
If you find employment right away, ask your new boss to either make you eligible for insurance the day you are hired or within the 60-day time period. Some companies will waive the waiting period for insurance eligibility as part of your compensation package.
- How healthy is your family? For some employees, COBRA premiums may be worth the cost. Employees, or their family members, who have chronic or recurring health conditions may choose to keep the coverage even if it costs more than their medical bills each month. That’s because a lapse in group health insurance coverage can mean that medical care for pre-existing conditions won’t be covered for up to a year when the employee becomes insured again with a new company.
Some employees choose to take out a short-term health care plan between jobs. These high-deductible, relatively inexpensive plans are perfect for healthy families who only need insurance coverage for unexpected health emergencies.
Some short-term health plans, however, do not qualify as continuous group coverage, so employees with health conditions that could be considered pre-existing conditions should check with their insurance carrier for details. Short-term group plans are also available through professional associations in many fields. Many of these plans will qualify as continuous group coverage.
- Are there any other options open to you?
Does your spouse have health insurance available through employment? You may be able to switch your coverage over to your spouse’s plan. Ask your spouse to check with the benefits administrator for details.
Are you willing to work part time for a company that offers health care benefits until you find a new job? Some employers offer benefits to part-time workers, which may be worth it if you believe your job search could take several months.
If you have any questions about COBRA coverage, be sure to check with your human resources department or employer for more information.