COBRA Insurance Coverage

COBRA Insurance Coverage

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Learn about how long COBRA coverage lasts

Losing your insurance coverage unexpectedly can make a stressful situation even more stressful, whether it’s as a result of losing a job, switching employers, getting divorced, or even the death of a loved one. When unlikely events happen, having an understanding of your options can help ensure that you and your family continue to receive the health benefits  you need. That’s where COBRA insurance comes in. 

Technically, COBRA is more of a law than it is a type of health coverage. COBRA stands for the Consolidated Omnibus Budget Reconciliation Act¹. It exists to help protect you and your family in event that you lose your employer-sponsored group health benefits. While it often refers to primary medical insurance coverage, COBRA can also apply if you lose employer-sponsored benefits that also include dental or even vision insurance. That way, you won’t have to experience a lapse in health or dental coverage. 

Here’s what you need to know about COBRA insurance: 

What is COBRA coverage? 

When you’re faced with unexpected job loss, there are so many things to consider. Aside from not knowing where your next paycheck will come from, you may also lose important benefits you and your family were used to, including health insurance, dental insurance, and vision insurance. COBRA gives workers and their families who unexpectedly lose health benefits the right to continue those group health benefits when faced with serious life events, such as job termination, switching jobs, or even divorce. 

However, this doesn’t mean you’ll all of a sudden get free insurance coverage for losing your job. Employers may require individuals who choose COBRA continuation coverage to pay the full cost of the insurance premiums, plus a 2% administrative charge. This means that the required payment for COBRA insurance coverage is typically higher than the amount active employees are responsible to pay for group health coverage². 

It’s important to note that COBRA only allows a temporary continuation of the same group coverage that you were already receiving. For instance, if you were receiving medical, dental, and vision coverage from your employer before losing your job, you would have the right to continue the same coverage as long as you qualify for COBRA. You could continue receiving the same health and dental benefits if you choose to. But if your employer only ever provided medical coverage, you typically would not qualify for dental or vision coverage with COBRA.  

COBRA doesn’t always apply – it depends on your employer and your individual situation. 

COBRA Insurance Coverage 

To be entitled to choose COBRA continuation coverage, these three basic requirements must be met: 

  • Your group health plan is covered by COBRA 

  • A qualifying event has occurred 

  • You’re a qualified beneficiary for that event 

COBRA covers employer-sponsored group health plans for employers that employed at least 20 full- or part-time employees on over 50% of their typical business days in the previous calendar year³. The plans sponsored by federal government, churches, and some church organizations do not qualify for COBRA. 

Qualifying events are events that cause a person to lose his or her group insurance coverage.  

Qualifying events for a covered employee include: 

  • Termination of employment (for any reason other than gross misconduct) 

  • Reduction in the number of hours of employment 

Spouses and dependent children can also benefit from COBRA continuation coverage. If they cause the spouse or dependent child to lose insurance coverage, qualifying events include: 

  • Termination of the covered employee’s employment (for any reason other than gross misconduct) 

  • Reduction in the covered employee’s number of hours 

  • The covered employee becomes eligible for Medicare 

  • Divorce or legal separation of the spouse from the covered employee 

  • Death of the covered employee 

  • Loss of dependent child status under the plan rules 

If you qualify and choose COBRA continuation coverage, you will continue to receive insurance from the same group plans. No need to get used to a new dental plan or deal with waiting periods or anything like that – if you use COBRA continuation coverage to continue your dental insurance, you’ll have the same dentist and the same benefits. 

In order to elect COBRA continuation coverage, you must notify the group health plan of the qualifying event that has occurred. If the qualifying event was termination of employment, reduction of hours of employment, death of the covered employee, an employee becoming entitled to Medicare, or bankruptcy, the employer is required to notify the plan within 30 days of the event. If the qualifying event was divorce, legal separation, or a child’s loss of dependent status, the covered employee or one of the qualified beneficiaries must let the plan know⁴.  

However, even if you are entitled to it, you are not required to use COBRA insurance coverage. You can also obtain health and dental coverage another way. If you’d prefer, you can always enroll in health insurance coverage in the health insurance marketplace and purchase individual dental insurance instead.  

When does the COBRA coverage period start and end? 

COBRA continuation coverage is only temporary. COBRA coverage starts on the date the qualifying event occurred and ends after a period of 18 to 36 months. The duration of your coverage will depend on the type of qualifying event experienced. This COBRA coverage period is the minimum employers must offer by law – some plans may provide longer periods of coverage⁵.  

This applies to any employer-sponsored health insurance group plans, including medical, vision, and dental insurance. 

Depending on your coverage time period, you’ll need to be prepared for the next steps when your COBRA coverage runs out. 

How long is COBRA coverage? 

COBRA coverage usually lasts 18-36 months, though some plans may provide longer periods of coverage. When the qualifying event is the termination of employment or reduction of hours, qualified beneficiaries can receive 18 months of continuation coverage, though it can be extended if the individual qualified for Medicare less than 18 months before the qualifying event or if any one of the qualified beneficiaries is disabled. For all other qualifying events, qualified beneficiaries are entitled to 36 months of continuation coverage⁶. 

It’s best to look into other options before COBRA continuation coverage runs out. Even if you don’t find a new employer who offers group health and dental coverage, it’s still possible to find affordable health and dental insurance after COBRA coverage ends. Here are a few options to look into: 

Health Insurance Marketplace 

If you’ve just lost your employer-sponsored health coverage, you may qualify to enroll in coverage during a special enrollment period⁷. If so, you’ll have 60 days to enroll in a health plan, even outside of the annual open enrollment period. 

Go on your spouse’s insurance plan 

If your spouse receives health and dental benefits through their employer, explore the option of adding yourself onto their plan as a dependent.  

Medicaid 

Many are eligible for Medicaid without even knowing it. If you’re still unemployed after your COBRA insurance runs out, you may meet the requirements for Medicaid, though the requirements will vary by state. 

HIPAA 

Another option is to go through HIPAA, the Health Insurance Portability and Accountability Act. HIPAA provides opportunities for broad-benefit, individual health insurance plans for those who lose their coverage due to their COBRA plan expiring⁸. 

If you're eligible and want to purchase health insurance this way, you must enroll in this option before your COBRA coverage runs up. 

Qualifications may include: 

  • You continue your COBRA coverage until it ends, without switching to an individual plan. 

  • You’ve had continuous health insurance for at least 18 months. 

  • You sign up for individual coverage within 63 days of your COBRA coverage ending. 

Purchase insurance directly 

Most health insurance plans do not include dental benefits. If you want dental coverage to help you budget for regular dental visits and treatment, you’ll need to purchase a plan on your own. You can purchase affordable individual dental insurance online. With multiple plan options available and guaranteed acceptance, Guardian Direct® is a well-known place to get dental insurance coverage for your family after COBRA continuation coverage expires.  

COBRA Continuation Period – Insights 

Electing to continue group health coverage through the COBRA continuation period can help you make sure you and your family never experience a lapse in health or dental coverage. But if you’ve just unexpectedly lost your group dental benefits, you can also use this opportunity to shop around and enroll in an individual dental insurance plan that best suits you and your family’s needs and budget. We’ve compiled a few resources to help you learn more.  

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Sources

  1. https://www.dol.gov/general/topic/health-plans/cobra, accessed May 2021

  2. https://www.dol.gov/sites/dolgov/files/legacy-files/ebsa/about-ebsa/our-activities/resource-center/publications/an-employees-guide-to-health-benefits-under-cobra.pdf, accessed May 2021

  3. https://www.dol.gov/sites/dolgov/files/legacy-files/ebsa/about-ebsa/our-activities/resource-center/publications/an-employees-guide-to-health-benefits-under-cobra.pdf, accessed May 2021

  4. https://www.dol.gov/sites/dolgov/files/legacy-files/ebsa/about-ebsa/our-activities/resource-center/publications/an-employees-guide-to-health-benefits-under-cobra.pdf, accessed May 2021

  5. https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-center/faqs/cobra-continuation-health-coverage-consumer.pdf, accessed May 2021

  6. https://www.dol.gov/sites/dolgov/files/EBSA/about-ebsa/our-activities/resource-center/faqs/cobra-continuation-health-coverage-consumer.pdf, accessed, May 2021

  7. https://www.healthcare.gov/glossary/special-enrollment-period/, accessed May 2021

  8. https://www.healthcare.gov/glossary/hipaa-eligible-individual/, accessed May 2021

  9. https://www.dol.gov/sites/dolgov/files/legacy-files/ebsa/about-ebsa/our-activities/resource-center/publications/an-employees-guide-to-health-benefits-under-cobra.pdf, accessed May 2021

Brought to you by The Guardian Life Insurance Company of America (Guardian), New York, NY. Material discussed is meant for general illustration and/or informational purposes only and it is not to be construed as tax, legal, investment or medical advice.(exp.Invalid Date)

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