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Benefits of COBRA Insurance
There are many COBRA benefits that people can utilize in order to continue their health insurance after they become unemployed, quit, or retire from their jobs. Additionally family members can use COBRA benefits to extend their coverage as well. COBRA was created for just this reason - to extend health insurance benefits to individuals/families after job loss so that people wouldn't suddenly find themselves without insurance and facing the difficult decision between health insurance and medical bills.
How Do COBRA Benefits Work?
In order to get the benefits of COBRA you must qualify under the provisions set forth in the federal law. This law was passed in 1986 and includes three provisions for eligibility known as qualifying plan, qualifying beneficiary, and qualifying event. To have a qualifying plan, the covered employee must have been on a plan that is still active and covered at least 20 employee full time. For the qualifying event provision the covered employee must have quit, retired from, or lost their job without gross misconduct or serious wrongdoing. Finally for the qualifying beneficiary provision, to get COBRA benefits you must be the employee, their spouse, or a dependent.
In addition, dependent children and spouses can qualify for COBRA in the event of death of the employee, if the employee qualifies for Medicare, divorce/separation from the covered employee, or if they outgrow legal dependent status.
Cost of COBRA Benefits
Continuing health insurance with COBRA will come at a premium cost. Under the law, people must pay both what they contributed to their health insurance cost plus whatever their employer contributed. Then on top of that there is a 2% fee. In most companies employers pay up to 80% of costs for medical insurance, so once the employee or family member is responsible for that 80% it gets very expensive.
How Long Do Benefits Last?
In most situation insurance can be continued for 18 months. However if you are a spouse or dependent child who lost coverage due to death, divorce, Medicare qualification, or loss of dependency your coverage can be extended an additional 18 months for a total of 36 months of coverage. Additionally some people can extend benefits due to a second qualifying event or disability.
What Will Change in My Plan with COBRA?
Fortunately, one of the key COBRA benefits is that nothing changes about your plan. The coverage you have with COBRA is simply an extension of the plan you had while employed. So nothing changes. All deductibles, copayments, prescriptions, and other coverage details will be unchanged.
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