COBRA Insurance

The Congress passed Consolidated Omnibus Budget Reconciliation Act (COBRA) in 1986 to establish health benefit provisions. The law amends the Internal Revenue Code, Public Health Service Act and the Employee Retirement Income Security Act to provide continuation of group health coverage that otherwise might be terminated after retirement. COBRA provides the right to temporary continuation of health insurance at group rates.

To be eligible for the Consolidated Omnibus Budget Reconciliation Act coverage, a person must have been enrolled in an employer health plan when he/she worked and the health plan must continue to be in effect for active employees. The employee, his spouse, dependent child or adopted child can be covered under the COBRA plan. The law generally covers health plans maintained by private-sector employers with 20 or more employees, state or local governments and church organizations.

Qualifying events are those that could make an individual loose their group health coverage. The qualifying events for employees are:

Voluntary/involuntary termination of employment for reasons other than gross misconduct.
Decrease in the number of hours of service/employment.

The Qualifying Events For The Employee's Spouse Are

Voluntary/involuntary termination of employment of the covered beneficiary for reasons other than gross misconduct.
Decrease in the number of hours of employment of the covered beneficiary.
Divorce or legal separation of the covered beneficiary.
Death of the covered beneficiary.

The Qualifying Events For The Employee's Dependent Children Are

Loss of dependent child status after a certain age.
Voluntary/involuntary termination of employment of the covered beneficiary for reasons other than gross misconduct.
Decrease in the number of hours of employment of the covered beneficiary.
Death of the covered beneficiary.

You Should Seriously Consider COBRA Coverage If:

You want continuous and guaranteed coverage.
You have had recent or ongoing health problems.
Your present medication is very expensive.
You have been rejected for private insurance plans.
You are pregnant or planning to become.
You got a new job and your employer does not offer health insurance plans.

Group health insurance turns out to be much more economical than other individual health insurance plans. When you terminate your job, and cannot afford to have an expensive health insurance policy, you should opt for Consolidated Omnibus Budget Reconciliation Act, which would allow you to participate in your employer's group health plan by paying for your own.