COBRA Coverage

Many people know that if you’re laid off from a large company, you’ll be offered COBRA health insurance benefits after your departure. But COBRA coverage is capable of so much more! Keep reading to find out how.

Many businesses offer COBRA coverage – more businesses than you may think

The Consolidated Omnibus Budget Reconciliation Act (COBRA) of 1985 stipulates that any employer that has 20 or more employees, and also, sponsors a group health plan, must give former employees the option of continuing the health insurance coverage, which they had while working, for another 18 to 36 months. 1

Can you get COBRA coverage after being fired?

Contrary to what you may have heard, it is definitely possible. COBRA coverage is granted only in the case of a layoff, a decision to quit, a reduction to part-time hours, an involuntary termination of employment, or even a company bankruptcy. For a full list of qualifications, don’t hesitate to speak with your insurance professional. Keep in mind that an employer can fire an employee and deny COBRA benefits only on the grounds of “gross misconduct,” but COBRA does not really define what gross misconduct is.2

One other thing to note: If you’re enrolled in Medicare, your former employer has no requirement to offer you COBRA coverage. Former employees who were ineligible for, or ones who simply never participated in their employer’s group health plan, are also not entitled for coverage.3

COBRA benefits do not come cheaply

Federal law gives employers the option to raise plan premiums by 102% during the initial benefits period and by 150% in months 18 to 29. This is often what happens.4

Under these conditions, you are paying your employer’s share of group health premiums as well as your own, plus an administration fee. It is your responsibility to pay the premiums and keep the insurance in force. Your coverage may be canceled if you are more than 30 days late with a premium payment.

Does the standard COBRA coverage period last 18 months?

That's right! If you quit, are let go, or have your hours reduced from full time to part time, then the term of coverage may last up to 18 months. If any other qualifying events lead to COBRA coverage, the benefits may continue for up to 36 months.5

COBRA usually extends all the group health benefits your employer sponsored.

For example, if your old plan offered health, vision, and dental coverage along with a medical spending account, all that should be offered to you under COBRA. Your former employer has no obligation to continue any life or disability insurance coverage through COBRA.

Divorcing spouses should take a look at COBRA

When an employee enrolled in a group health plan divorces, the plan commonly ends coverage for the ex-spouse. The law defines a divorce as a qualifying event, however, and through COBRA, a divorcing person can stay on an ex-spouse’s group health plan for up to 36 months.

  1. BizFilings, 2018
  2. BizFilings, 2018
  3. BizFilings, 2018
  4. BizFilings, 2018
  5. Forbes, 2018

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG Suite is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright 2019 FMG Suite.

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