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COBRA Insurance – Your rights as a Consumer

If you have recently lost your job or have been told that you will be laid off, it’s time to look into COBRA health insurance. COBRA insurance is mandated in a law passed in 1986 called the Consolidation Omnibus Budget Reconciliation Act. This is not something that is offered by insurance companies. COBRA extends the coverage you were receiving through your employer. It also allows your spouse and children to be covered if they were added to the policy prior to termination.

But what are your legal rights when it comes to claiming COBRA insurance?

Who Is Eligible?

Former employees that were previously covered under a group plan consisting of at least 20 full-time employees are eligible to receive COBRA insurance coverage. Anyone who qualifies under these circumstances also has coverage for their spouse and children if they were added to the policy prior to termination. Children born after the beginning of a COBRA plan insurance or children adopted in that period are also covered.

There are three specific criteria that must be met to receive COBRA insurance coverage:
  1. Your workplace has 20 or more employees.
  2. You must encounter a “qualifying event.” (see below for events)
  3. You must be coverage the time of the event occurring.
Qualifying Events:
  • Loss of employment, EXCEPT through gross misconduct
  • Legal separation or divorce (note: the spouse and children are now eligible)
  • Becoming eligible for Medicare (note: the spouse and children are now eligible because the employee will lose coverage)
  • Death of the employee (note: the spouse and children are now eligible)
  • A child loses dependent status (note: the child is now eligible for COBRA)

How long can you receive COBRA coverage?

The initial maximum coverage period for group insurance benefits under COBRA is 18 months. Under special conditions the coverage can be extended to 36 months.

Who pays for COBRA?

The qualified beneficiary of the COBRA insurance pays the premium themselves. This premium cannot exceed 102% of a similar group plan.

Can I get reduced COBRA premiums under the Stimulus Act?

Embedded in H.R. 3326, a measure appropriating funds for the Department of Defense, the nine-month, 65% premium subsidy would be extended by six months to a total of 15 months. It would apply to those who lose their jobs through Feb. 28, 2010. Under current law, employees who lose their jobs after Dec. 31 are ineligible for the subsidy.