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COBRA: continuing your health benefits beyond termination

 

US DEPARTMENT OF LABOR - Health Plans & Benefits - COBRA

"The Consolidated Omnibus Budget Reconciliation Act (COBRA) gives workers and their families who lose their health benefits the right to choose to continue group health benefits provided by their group health plan for limited periods of time under certain circumstances such as voluntary or involuntary job loss, reduction in the hours worked, transition between jobs, death, divorce, and other life events. Qualified individuals may be required to pay the entire premium for coverage up to 102 percent of the cost to the plan.

COBRA generally requires that group health plans sponsored by employers with 20 or more employees in the prior year offer employees and their families the opportunity for a temporary extension of health coverage (called continuation coverage) in certain instances where coverage under the plan would otherwise end.

COBRA outlines how employees and family members may elect continuation coverage. It also requires employers and plans to provide notice."

 

US DEPARTMENT OF LABOR - Health Plans & Benefits - COBRA    - This article has lots of information about COBRA, including who is eligible, when is one eligible, for how long, who is responsible for what, and much more.  Do read this if you anticipate losing your health benefits!

COBRA HEALTH INSURANCE -  affordable alternative plans to COBRA coverage of medical, dental or life insurance

COBRA INSURANCE - short-term health coverage

 

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COBRA INSURANCE BASICS in plain English

COBRA insurance is a vehicle that allows an employee to continue with his / her health insurance coverage when it would otherwise have been terminated.  This loss of benefits must be a result of voluntary or involuntary loss of employment, reduction of working hours, being between jobs, divorce, death or other events described in US DEPARTMENT OF LABOR - Health Plans & Benefits - COBRA. 

The employee has 60 days from termination of coverage to elect which plans will continue and for whom.  It is possible to drop some plans or people from coverage, especially if coverage is found elsewhere for a lower cost.  COBRA will cost 102% of the full premium paid by the employer, which includes a 2% administrative fee for the company that is designated by the employer to manage the account.

Our COBRA options and costs are listed below, compared with the $359.96 that we actually paid every month for the whole family.  It will give you an idea of how your monthly premium can change, which depends on your employer's contribution toward your policy.  My husband's employer was very generous!

Coverage with COBRA                             Single Plan/mo       2 Party Plan       Family Plan

All coverages: Medical, Dental, Vision           498.49                   892.33            1333.81

Medical [$3500 deductible]                         456.13                   811.93              1185.95

Dental                                                       36.83                     69.98                132.60

Vision                                                          5.53                     10.42                 15.26

 

Our premium before COBRA:                                                                           359.96

 

Single Plan with COBRA  [Medical, Vision]       461.66

New separate policies for family [3 people]      274.79  Health     57.72 Dental     no Vision                                                 

New total monthly premiums for family  [we save $539.64]                                 794.17

 

Suggestions for finding the right COBRA coverage for you:

  • It is a good idea to shop around for other insurance plans if the premium is going to increase drastically.  Going from roughly $360 to $1333 a month was impossible for us.
  • Consider and price separate policies for different people to see if you can lower premiums that way.  Just make sure that a new policy covers all the medical needs of the person.
  • A short-term policy can be activated in a day or so, and can cover a person during the month that it takes a new long-term policy to be underwritten.  This is useful if persons are dropped from COBRA in order to find a less expensive insurance policy.
  • If you anticipate needing COBRA, ask your employer or the COBRA administrator if you can make your elections and pay at least 30 days before termination of your existing plan.  This will eliminate any gap in coverage while transitioning from your plan to COBRA.  You can get a reimbursement for any expenses that would have been covered by your insurance plan, but can you afford to pay out-of-pocket?
  • Request URGENT RE-INSTATEMENT for your case, if needed, once you elect your COBRA insurance benefits.  This means that the COBRA administrator would bump up your case to have it re-activated in about 1 week or so, instead of 4 weeks.
  • COBRA will continue coverage for 18 months.  It is possible to extend this coverage another 11 months IF a person becomes disabled within the first 60 days of COBRA coverage.  In this case, COBRA premium will be 150% of the original premium.  You'd be better off getting another policy!  Because pre-existing conditions come into play if disabled, ask insurance carriers if they'd cover the disability or other condition.  They may cover the person and not the disease / condition for the first 6 months.  Blue Cross Blue Shield High Risk Pool in Texas will waive the 6-month exclusion if the person stays on COBRA all 18 months.
  • Do check with your COBRA administrator to see exactly what your plan says regarding Medicare coverage while on COBRA.  While some insurance plans work well with Medicare by outlining who pays first for services rendered, the Department of Labor requires you to stop COBRA if you are eligible and enrolled in Medicare.  What this could mean is that if Medicare is offered while on COBRA, your plan, following DOL rules, may require that you accept and enroll in Medicare, therefore forcing you to stop COBRA.  You may not have a choice to refuse Medicare.  Be sure to ask your COBRA administrator!
  • If receiving Social Security Disability Benefits, you will be automatically enrolled in Medicare Part A & B around 21 months after you began receiving benefits.  You will have the option to keep Part B or not, & to begin active coverage after month 24.  Even if you do not keep Medicare Part B, you are still enrolled in Medicare Part A at no charge.  Although being enrolled in Medicare may be a great help, check with your COBRA administrator to see if you can keep COBRA while enrolled in Medicare Part A.  If enrolling in Medicare is not a good thing at the time that Social Security automatically enrolls you, you can call Social Security to cancel Medicare Part A.  They will send you forms to fill out & to return.  Before you cancel Medicare, however, ask your COBRA administrator if you can refuse Medicare and continue your COBRA coverage.  They may require you to accept Medicare and to stop COBRA because you are eligible for & have been offered health insurance.
  • You can end your COBRA insurance coverage sooner than 18 months by notifying your COBRA administrator that you want to stop it or by just not paying the next monthly premium.  Remember that once COBRA is terminated, it cannot be reinstated.

 

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Our experience transitioning into COBRA was an eye-opener, to say the least!  If nothing else, we learned that the efficient process that is in place on the employer / insurance / COBRA administration side leaves out the most important piece: the insured person(s).  While all of the companies involved are busily communicating with each other about the upcoming "change [a.k.a. loss] in benefits," the employer and the COBRA administrator need to notify the employee about the loss of benefits approximately 60 days before termination.  This would eliminate going without coverage while COBRA is established, which normally can take up to 4 weeks.  Two months would give the employee time to look for coverage elsewhere and to get COBRA activated without rushing into anything.

It may sound unimportant, but when you are in a situation where a family member is suffering or requires a great deal of care, it can be an overwhelming task to stay on top of every detail that needs attention every day.  A reminder in the mail that something is coming up would be welcome!  Various types of subscriptions do this, why can't health insurance follow suit?

I have included a link to our very own COBRA story below.  It does have a happy ending!

 

COBRA: OUR SERPENTINE ROLLER-COASTER RIDE

LESSON LEARNED: When electing COBRA, request information about 2 months before your health benefits end.

Good to know about COBRA:

  • the COBRA process
  • what form you need to specify coverage
  • not all persons on the original policy have to stay on COBRA or stay on with all of the plans [like medical, dental, vision]
  • you must pay for the policy before re-activating coverage
  • coverage is retroactive to the day after the previous policy ended
  • you can file a claim for cost of meds incurred before establishing COBRA
  • you usually have 2 months to make a decision on COBRA, but that you don't want to be without insurance coverage longer than 63 days - insurance companies may charge you more for a policy then
  • COBRA costs 102% of your previous policy's full price and that it lasts 18 months maximum - as long as you pay your premium timely
  • if COBRA stops, you cannot re-establish it
  • if you are on disability, you can extend COBRA to 29 months at 150% of the previous premium
  • a private insurance carrier can waive the 6-month pre-existing condition exclusion if you remain on COBRA the full 18 months before 2014 [adults with pre-existing conditions will not be denied coverage in 2014 thanks to Healthcare Reform!].

 

 

We all have the choice to sink or to swim.  Choose to swim!

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