COBRA Insurance

Suze Orman says:

"Those who have been laid off or are worried about losing their job and health insurance coverage should shop around. Ehealthinsurance.com offers the largest individual . . . health plan selection across more states than any other online or offline source. While many employers must extend health insurance coverage to all laid-off employees for 18 months - thanks to a federal law known as COBRA - you must pay 100 percent of the policy premium. Chances are good you can get a less expensive policy by doing your own shopping."

*Suze Orman, "O" Magazine, August 2003

What is COBRA?

Overview

COBRA is not a health insurance plan. It's a law, the Consolidated Omnibus Budget Reconciliation Act. It protects you and your family if you lose your employer-sponsored health benefits.

If you qualify for COBRA coverage, then you have the option of continuing your employer-sponsored health plan for a limited period of time. COBRA requires that three requirements be met before you can qualify for COBRA coverage: (i) that your employer is obligated to provide COBRA coverage; (ii) that you are a Qualified Beneficiary; and (iii) that a Qualifying Event has occurred.

Under COBRA, you may be responsible for paying up to 102% of the health insurance premium on your own.

Employer Requirements

Federal employees do not qualify for COBRA. They are protected under a different law. If you are an employee of the Federal Government, you should contact your personnel office to learn more about continuing coverage of your health insurance benefits.

Qualified Beneficiaries

You are eligible for COBRA coverage only if you were participating in your employer-sponsored health plan before the Qualifying Event occurred.

COBRA coverage may be offered to employees, an employee's spouse, or an employee's dependents. In certain cases, this includes a retired employee, and the retired employee's spouse and dependents. If you are expecting a child or adopt a child during the period in which you are receiving coverage through COBRA, then that child will also qualify as a beneficiary.

You can choose to accept coverage under COBRA just for yourself or for your family. You can also choose to forego COBRA for yourself and just cover your spouse or dependent children.

Qualifying Events

The chart below outlines the circumstances under which you or a covered dependent may opt to continue your health insurance coverage through COBRA:

Qualifying Events for COBRA
Employee	If you leave your job voluntarily; this includes retirement If your work hours are reduced so that you are no longer eligible for health benefits under your employer's policy If you leave your job involuntarily for any reason other than gross misconduct
Employee's Spouse	If the employee's work hours are reduced If the employee leaves the job for any reason other than gross misconduct If the employee becomes entitled to Medicare Divorce or legal separation Death of the employee
Dependant Children	If the employee's work hours are reduced If the employee leaves the job for any reason other than gross misconduct If the child loses dependent child status under the employer sponsored health plan's rules If the employee becomes entitled to Medicare Divorce or legal separation Death of the employee

Non-Qualifying Events

Notice that the Qualifying Events for COBRA are events that affect your employment status. Events that affect only the type of health insurance plan your employer offers are not Qualifying Events. Thus, if you remain fully employed and your employer reduces, changes or abandons its sponsored health insurance plan, you will not qualify for COBRA.

COBRA Coverage

Your health insurance coverage under COBRA must be identical to the coverage your employer offers its current employees. Generally, this means that you should get the same coverage after the Qualifying Event as you did before.

If your employer reduces coverage to its current employees or cancels its employer sponsored health insurance benefits altogether, then your coverage will be affected. You will be entitled only to the same benefits as current employees have. This means that if your employer cancels its sponsored plan, then you will no longer be entitled to COBRA.

Providing Notice - the Plan Provider's Responsibilities

When you become a participant in your employer's sponsored health insurance plan, the plan administrator must provide you with an "Initial Notice" that outlines your rights under COBRA.

When a Qualifying Event occurs, your employer must provide you with "Specific Notice" that you are qualified to elect continuing coverage under COBRA.

Providing Notice - Your Responsibilities

You are responsible for notifying your plan administrator after certain Qualifying Events occur. These Qualifying Events are: divorce, legal separation or loss of "Dependent Child" status. The length of time you have to report these Qualifying Events depends on your plan's rules. Many plans require notice to be made within 60 days of the Qualifying Event.

Selecting COBRA

By law, when a Qualifying Event occurs, your employer must provide you with notice that COBRA is available. You may be informed in person, or you may receive this notice in the mail. Once you receive notice, you have 60 days to choose COBRA continuation coverage. If you select COBRA, then your coverage will be retroactive to the day you lost your health insurance benefits due to the Qualifying Event.

If you initially reject COBRA continuation coverage, you still have a chance to change your mind. As long as you are within the 60 day window, you can inform your employer that you do want COBRA continuation coverage. Your coverage will begin from the day you inform your employer.

COBRA Term

COBRA coverage continues for 18 months. If you initially elect COBRA, then your coverage will begin on the first day that you would have lost your health insurance benefits due to the Qualifying Event. If you initially rejected COBRA, but changed your mind within the 60-day window, then your coverage will begin on the day you notified your employer.

The COBRA term can be extended if you become disabled within the first 60 days of COBRA continuation coverage. To qualify for this extension, you must submit a ruling from the Social Security Administration that says you have become disabled. If you qualify, then you and your family may extend your COBRA coverage for an additional 11 months, but you may be required to pay up to 150% of the premium cost for those additional 11 months.

A spouse or dependant may extend the COBRA continuation period to a maximum of 18 months under certain circumstances. These circumstances include divorce or separation from the covered employee, death of the employee, a child's loss of dependant status or if the employee becomes eligible for Medicare within the continuation period.

Filing a Claim for Health Benefits Under COBRA

Health insurance plans are required to explain how to obtain benefits and must include written procedures for processing claims. Claims procedures must be described in the Summary Plan Description.

You should submit a claim for benefits in accordance with your plan's rules for filing claims. If the claim is denied, you must be given notice of the denial in writing generally within 90 days after the claim is filed. The notice should state the reasons for the denial, any additional information needed to support the claim, and procedures for appealing the denial.

You will have at least 60 days to appeal a denial and you must receive a decision on the appeal generally within 60 days after that.

Contact the plan administrator for more information on filing a claim for benefits. Complete plan rules are available from your employer or your health insurance company. There can be charges up to 25 cents a page for copies of plan rules.

COBRA Time Line

Initial Notice of COBRA Rights	14 Days from Enrollment in Employer Sponsored Health Insurance Plan
Qualifying Event Notice: 1. In the Event of Termination or Reduction of Hours: Employer Notifies Insurance Company Insurance Company then contacts Employee 2. In the event of divorce or loss of dependent child status or if employee becomes eligible for Medicare	30 Days 14 Days 60 Days from Qualifying Event
Select COBRA	60 Days from Date of Notice of Eligibility of Coverage due to Qualifying Event
First Premium Payment Due	45 days from COBRA selection
Extension for Disability	Disability must occur within 60 days of COBRA coverage
COBRA Ends Initial Term Extension due to Disability Extension for Spouse, Dependent Child or Employee becomes eligible for Medicare	18 months 29 months 36 months

Government Resources

COBRA laws are administered by several agencies. The Departments of Labor and Treasury have jurisdiction over private-sector health group health plans. The Department of Health and Human Services administers the continuation coverage law as it affects public-sector health plans.

The Labor Department's interpretive and regulatory responsibility is limited to the disclosure and notification requirements of COBRA. If you need further information on your disclosure or notification rights under a private-sector plan, or about COBRA generally, telephone the Employee Benefits Security Administration at:

U.S. Department of Labor
Employee Benefits Security Administration
Division of Technical Assistance and Inquiries
200 Constitution Avenue NW, Suite N-5619
Washington, DC 20210

The Internal Revenue Service, Department of the Treasury, has issued regulations on COBRA provisions relating to eligibility, coverage and premiums in 26 CFR Part 54, Continuation Coverage Requirements Applicable to Group Health Plans. Both the Departments of Labor and Treasury share jurisdiction for enforcement of these provisions.

The Center for Medicare and Medicaid Services offers information about COBRA provisions for public-sector employees. You can contact them at this address and telephone number:

Centers for Medicare and Medicaid Services
7500 Security Boulevard
Mail Stop C1-22-06
Baltimore, MD 21244-1850
Tel 1.877.267.2323 x61565

Terry Savage says:

"What few people know is that for healthy individuals and families, there very well might be less-expensive alternatives to COBRA policies... That's why it's so very important to understand how COBRA coverage works - and your alternatives. The best place to start is www.CobraLearning.com - a Web site developed by eHealthInsurance.com that offers information and quotes on individual health policies, no matter where you live."

Chicago Sun-Times, September 2008. Distributed by Creators Syndicate. Copyright Terry Savage Productions Ltd.

Is COBRA the Right Choice for Me?

Overview

COBRA can provide important protection for people who have pre-existing medical conditions that may prevent them from getting approved for a new health insurance plan on their own. You should carefully consider COBRA coverage if you or a member of your family are currently pregnant, have a pre-existing health condition, are taking prescription medications, or have been declined for private health insurance.

However, if you and your family are relatively healthy, you may be able to purchase a comparable individual and family health insurance plan for a lot less money than COBRA will cost. You can research the individual and family plans offered in your area through eHealthInsurance.

COBRA Eligibility Guide

This chart can help you determine whether you are eligible for COBRA and if so, for how long.

Qualified Employee	Beneficiary	Qualifying Event	Term	Cost
Employer employed at least 20 workers in previous year Employer sponsors health insurance plan for employees Not employed by the Federal Government	Employee Spouse Dependent Child	Voluntary or involuntary termination of job (other than termination for gross negligence) Reduction of work hours	18 months	Up to 102% of the health insurance premium
	Employee Spouse Dependent Child	Termination or reduction of work hours + disability that is certified by the Social Security Administration	29 months	Up to 102% for the first 18 months; up to 150% of the health insurance premium for the next 11 months
	Spouse Dependent Child	Divorce or legal separation Death of employee Loss of "Dependent Child" status Employee enrollment in Medicare	36 months	Up to 102% of the health insurance premium

Consider COBRA if:

Consider purchasing an individual and family plan if:

And remember:

An eHealthInsurance member says:

"When I was laid off, I accepted COBRA coverage at $620 a month because I didn't know that I could find an individual plan with comparable benefits at a far lower rate," said 30-year-old eHealthInsurance member Jason Bobo from Dallas, Texas. "We found a plan for my family online for only $288 a month. With four small children under the age of seven and managing through a tough economy, it was important to have both the right benefits, such as well baby care, and the cost savings of more than $300 a month on premiums."

How Much do COBRA and COBRA Alternatives Cost?

The Cost of COBRA

eHealthInsurance commissioned a nationwide survey that suggests that many consumers aren't aware of COBRA and health insurance alternatives to COBRA. The survey found that:

• 4 in 10 adults surveyed knew little or nothing about COBRA;
• 60% did not know that individually purchased health insurance can be less expensive than COBRA; and
• Only 45% were aware that individually purchased health insurance can provide similar benefits to a COBRA plan.

When you're enrolled in a group health insurance plan, your employer usually pays some or all of the premium. However, when you go on COBRA, you are usually required to pay the entire premium on your own, plus a 2% administration fee. If you extend the term of your COBRA coverage because of disability, you may be required to pay up to 150% of the premium. That is why COBRA can be very expensive.

To maintain COBRA coverage, you must pay your premiums in a timely manner. Your first premium is due 45 days after you chose COBRA. After that, you are allowed to pay on a monthly basis, though some plans permit other payment terms.

You can expect your first premium to be higher than subsequent premiums. This is because there will likely be a lapse of a month or more between the date on which you first became eligible for COBRA and the time you made your COBRA election decision. For example, if you leave your employer on January 1, and elect COBRA coverage on February 1, you will be charged retroactively for January as well as February.

You may not receive a monthly statement for your COBRA coverage. You are still responsible, however, for making timely payments.

The Cost of COBRA Alternative Plans

It is important to know that you may have other health insurance options available in case COBRA doesn't fit into your budget. At eHealthInsurance, we know that COBRA coverage is not always the best option for everyone. You may be able to purchase an individual or family health insurance plan on your own that is better suited to your needs and budget.

In many cases, with a little research, you can find a more affordable individual and family plan that provides you with the health insurance you need at a price you can afford.

Here are some sample monthly rates for individual health insurance plans that are offered through eHealthInsurance.*

Age	San Francisco, CA	Chicago, IL	Atlanta, GA
25-29	$50	$47	$38
30-34	$61	$52	$42
35-39	$52	$64	$53
40-44	$95	$84	$69

*Sample insurance premiums are based on coverage for single, healthy males residing in the specified cities quoted on 07/25/08. These sample quotes are for illustration purposes only; the plans represented by these sample quotes may materially differ from the coverage provided by your current plan.

Please note that while you may be able to find health plans on eHealthInsurance that are less expensive than your COBRA coverage, in most states it is possible to be denied coverage if you have certain pre-existing conditions. Though COBRA may be expensive, you cannot be denied for coverage based on your medical history.

However, if you are relatively healthy and not currently pregnant, you owe it to yourself and your family to take a look at the other health insurance options available to you. You could save hundreds of dollars per month on health insurance.

How eHealthInsurance Can Help

At eHealthInsurance, we specialize in matching individuals and families with the quality, affordable coverage they need. If you'd like to consider alternatives to COBRA coverage, we can help by providing you with:

FAQ's

What is COBRA?

Is my employer obligated to continue my benefits under COBRA?

Who is responsible for notifying me about COBRA?

What if my employer ignores its COBRA obligations?

What are Qualifying Events?

What are not Qualifying Events?

My employer has changed the health insurance plan it sponsors. Can I qualify for COBRA?

My employer has filed for bankruptcy. Can I qualify for COBRA?

Who is eligible for COBRA continuation of benefits?

Are newborns and adopted children eligible for COBRA continuation of benefits?

Can I choose one option for myself and a different one for my eligible dependents?

How long do I have to decide whether I want to continue any or all of my benefits available under the COBRA continuation of benefits?

I told my former employer that I did not want COBRA, but I've changed my mind. Can I still obtain COBRA?

What plans are covered under COBRA continuation of benefits?

What plans are not covered under COBRA continuation of benefits?

Must I enroll in all of the medical, dental and vision plans under which I was covered as an active employee?

What happens to my Health Care Flexible Spending Account (FSA) and/or Dependent Care FSA?

When does the COBRA continuation of benefits begin?

How long do COBRA benefits last?

Can I extend my COBRA coverage?

What would cause my COBRA coverage to terminate early?

When are my premiums due?

How much will COBRA cost?

Why is COBRA so expensive?

How do I file a claim under COBRA?

May I get insurance coverage outside of the COBRA continuation benefits plan?

How do I cancel COBRA?

My COBRA term is ready to expire, what should I do?