Connecting COBRA to Job Loss and Unemployment
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UPDATED: Aug 13, 2020
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With so many people out of work, or losing their jobs, a big question these uncertain days has to do with health insurance. What becomes of my insurance when I lose my job, unemployed, or laid off? How long can I remain covered? How much will it cost?
The last question varies with your company plan, with whether or not you qualify for the Federal subsidy, and which family members you choose to cover. COBRA is absurdly pricey, there’s no getting around it. If your former employer has 20 employees or more, and you were not fired for gross misconduct you qualify for COBRA. In some states, smaller employers also qualify; so check your state laws where you live.
Depending on how your company plan is written, your coverage may end the same day as your employment, or it may continue to the last day of the month. That’s something you’ll want to check with your soon-to-be ex-employer. In some rare cases, it may even end before your last day, so don’t forget to confirm your coverage end date with HR.
Your employer and/or the plan administrator have a combined 44 days to send you the information about your COBRA continuation option. From your receipt of this information, you have a 60 day window to make your election. If you take COBRA, you have 45 days to ante up your first payment from the date you officially elected to continue your group coverage. For example, if you make your election on September 1, you have until October 15 to send in your first payment. Your employer may, and almost certainly will, cancel your coverage until they have received your first payment. However, the coverage will be retroactive to the cancelation date, no exceptions, so you will not lose any coverage. You will probably have to contact the carrier and ask them to resubmit any claims you may have submitted during the interim time.
An important thing to keep in mind is that once you elect COBRA, it is your responsibility to make your monthly payments, and make them on time in order for your coverage to continue. Your employer is not obligated to bill you or provide a notice of late payment. You will, under the law, have a 30 day grace period beyond the due date to make your payment; however, if you forget to send in a payment, you are not guaranteed to have your coverage reinstated.
In most cases, your benefits as a COBRA participant are seamless. The COBRA continuation option will be identical to your benefits as an active employee. In some cases, you may have the option of switching to another plan when you elect your COBRA coverage; however, in that case you will have the same benefits as an active employee on that plan. Your benefits, as a COBRA participant, will never be different from those of an active employee on the same plan.
This applies to more than benefits. In all respects except cost, you will be treated for COBRA purposes exactly as if you were an active employee. If benefits change for active employees, they change for COBRA participants. If benefits end for active employees, they end for COBRA participants. If the cost changes for active employees, the cost changes for COBRA participants. You will receive everything that active employees on the same plan get; you will receive nothing that active employees do not get. Only the cost is different.
The above is just a snapshot; nuances and exceptions abound and are beyond the scope of this article. Be sure to read all your COBRA paperwork carefully and ask your HR representative if there is anything you don’t understand. Click here for information on COBRA continuation coverage under The American Recovery and Reinvestment Act of 2009 (ARRA), as amended on March 2, 2010 by the Temporary Extension Act of 2010.)