COBRA Insurance Basics
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The Consolidated Omnibus Budget Reconciliation Act of 1986, also known as COBRA insurance, was designed as a booster insurance package for employees whose employers' insurance policies do not provide coverage for employees and their families after they have ended their professional relationships with their companies. The COBRA health insurance coverage offers 18 months of extended insurance benefits, once the employee has been terminated or changed jobs. This, however, is only available for companies of 20 or more employees.
Costs and Fees for COBRA Insurance
COBRA insurance plans are a bit more expensive than a conventional group health insurance package. The premium though, cannot go past 102% of the cost to the plan for individuals who are similarly situated who have not sustained a qualifying event, including the part paid by the employees and any portion shouldered by the employer prior to the qualifying event, plus 2% for administrative costs. However, this is effectively countered by what a COBRA policy has to offer:
- enables you to carry on your medical history with the insurer
- continue to cover any preexisting conditions that have already been allowed
- cheaper in contrast to getting a new individual health insurance policy on your own
Benefits of COBRA Insurance
Apart from the employees, beneficiaries can also reap the benefits of COBRA insurance. For example, COBRA-insured parents can use the benefits of COBRA to cover their children once they lose their dependent status on their group health plan.
Other health insurance providers do not hold true any preexisting conditions once you apply for a new health plan and will not cover those conditions. COBRA, on the other hand, does. There are certain guidelines, however, regarding who is eligible to receive the benefits provided by COBRA health insurance coverage.