Healthy Lifestyle

Posts Tagged ‘Cobra’

In today’s economy, there is very little job security meaning jobs are being lost left and right. Unfortunately, one of the secondary effects of losing your job is that you lose your health coverage as well. Thankfully there are programs in place that can extend your health coverage for up to 18 months following a termination, career change, or even retirement.

COBRA insurance was enacted into a law to protect you from losing your healthcare in scenarios such as getting fired or laid off. Officially known as the Consolidation Omnibus Budget Reconciliation Act, it is designed to provide medical insurance coverage for employees and their families even after they severed ties with their employer. People must also understand that COBRA is a law, not an insurance package.

Before COBRA medical insurance was enacted to cover medical needs of terminated employees, the group health plans of terminated workers and those who changed employers were immediately cancelled. With the advent of COBRA insurance, employees who have been fired or laid off will receive 18 months of medical coverage of the same health insurance policies their employers gave them.

However, the benefits of COBRA medical insurance are available only as a group plan and not as individual health coverage. You need to be a part of a health plan group of 20 or more employees for you to be eligible to apply for COBRA medical insurance policies.

The Price of COBRA Health Insurance

The price of a COBRA policy is also significantly higher than the total price of the medical insurance policy bought by your employer. The total cost of a COBRA insurance package is the total amount of your group healthcare plan plus 2% administrative fees. COBRA is more expensive than other group plans, but also provides peace of mind knowing that your family or individual health coverage plan is extended to cover you or your family in case of emergencies or severe health issues.

What makes COBRA unique from other forms of medical and health insurance plans is that COBRA will continue to cover any pre-existing medical conditions that were approved and covered by your original health plan. If you happen to be afflicted with a medical condition, COBRA will cover the said condition. Other health insurance providers do not cover pre-existing conditions and will not hold them true if you apply for a new policy.

Why COBRA is a Wise Choice

There are a lot of reasons why applying for COBRA is a wise move. Apart from the fact that you are medically insured and covered for a period of 18 months after leaving your job, you continue to receive all the benefits you once got from the same health plan insurer you had before you left your job. As mentioned before, COBRA covers any pre-existing or recent medical problems, which is not present in health insurance plans offered by other health insurance providers.

If you lose your job and rely heavily on your health insurance plan for sharing the cost of expensive medications, applying for a COBRA policy is an excellent choice. COBRA covers the cost of prescription drugs, as well as other services such as maternity benefits and accident insurance.

COBRA also offers an alternative policy for those who could not afford the COBRA option offered by their employers. The COBRA alternative is designed for people who are in good health and with no pre-existing medical condition and do not need to take expensive medication.

While COBRA provides an opportunity for individuals to retain health care insurance, individual health coverage plans are much more reasonable as it pertains to cost.

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The Consolidated Omnibus Budget Reconciliation Act of 1985, or COBRA, allows unemployed workers to keep their health insurance from their previous employer for up to 18 months.

Up until the 15-month subsidy was approved last year as part of the federal economic stimulus bill, laid-off workers were required to pick up the full premium. With the subsidy, the unemployed paid 35 percent of the cost.

That subsidy is now at risk while the U.S. Senate considers whether to extend it. It was eliminated from one jobs bill but is included in a second jobs bill. The Senate, however, has not decided which bill it plans to hear, said Cheryl Fish-Parcham, director of health-care policy for Families USA.

If the subsidy is allowed to expire, no one laid off after Feb. 28 will be eligible for the reduced premiums.

That could mean many won’t be able to afford the premiums and would join the growing rolls of the uninsured, according to Families USA, a national organization for health care consumers.

Throwing a lifeline

The federal subsidy “gives people a small margin of hope,” said Terra Eyl, a career transition specialist with the Larimer County Workforce Center in Fort Collins.

Without the subsidy, COBRA premiums can cost upwards of $1,000 a month making it unaffordable for most families trying to live on unemployment benefits.
Even with the subsidy, COBRA payments can be unaffordable for people, particularly those with lower incomes, Eyl said. “But a small margin of hope is better than no margin, in my opinion.”

Families USA estimates an additional 57,500 Coloradans became uninsured last year when they lost their jobs. And, although economic recovery appears to be under way, economists agree job growth is still a long way off, meaning the unemployment rate is likely to rise this year.

One quarter of Larimer County residents between 18 and 65 were uninsured at some point from 2005 through the end of 2007, according to Health District of Northern Larimer County, the latest statistics available.