Understand COBRA

If you experience a “qualifying event” such as voluntary resignation, your former employer’s COBRA Administrator will mail you a package (they are legally obligated to mail it to you, they will likely not give you a copy if you ask in person) detailing your COBRA rights, how to enroll, and payment information. You will want to read this package very carefully. Usually most former employees are qualified to receive COBRA but here is a clearer list:

1. An employee and his or her dependents who would otherwise lose coverage because of a reduction in scheduled work hours or termination for a reason other than gross misconduct.
2. A spouse and/or children who would lose coverage because of divorce or legal separation.
3. A surviving spouse and/or children who would lose coverage because of death.
4. A spouse and/or children who would lose coverage because of an employee’s entitled to Medicare.
5. An employee’s child who would lose coverage because they no longer meet the definition of being a dependent.

As you can see, the list is pretty comprehensive and covers most situations. Unless you were dismissed because of gross misconduct, you and your dependents are likely qualified for COBRA.

COBRA stands for the Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985, a bill that was passed in 1986, and it amends the Employee Retirement Income Security Act (ERISA), the IRS Code and the Public Health Service Act. So, what does COBRA do? Well, it requires that a group health plan must offer every qualified person the opportunity to continue the same coverage they had while an employee or a dependent, after they cease to become one. In most instances, it gives an employee that has been terminated or has voluntarily resigned, the opportunity to continue their existing level of medical coverage.

The actual scope of individuals that are covered is quite broad because COBRA also applies to dependents of employees as well, which can included spouses, children, etc.; and the but the cost will usually be much higher. The reason for this difference is price is because your employer will no longer be paying part of the premium, that financial burden falls entirely on the insured.

In the remainder of this site, I will discuss to you the various details of COBRA plans that may be of interest.