What is COBRA Insurance and How Does it Work?


Many people find the insurance industry as a whole quite difficult to understand. It’s not uncommon, and it’s not even something that anyone can blame. Insurance encompasses so many different aspects of life and it’s not always easy to stay in the know about every single one of them. Sometimes, in fact, it’s actually difficult to comprehend what a certain policy might mean or what it might entail. It happens, and it certainly does not make you an idiot, even if you still feel like one. COBRA insurance, for example, is not a company or a brand. It’s something entirely different. Some people know what it is and others have heard of it but have no idea what it means or what it is. It’s a complex type of insurance that certainly is not your regular insurance, and that leaves people with a lot of questions.

COBRA stands for Consolidated Omnibus Budget Reconciliation Act; it’s something that the federal government put into place to protect those who have lost their employer-sponsored health benefits. The purpose of this type of insurance is to continue to provide you with health coverage over the course of a very limited time frame while you look for other insurance options to suit you and your family’s needs. While it’s not always easy for everyone to understand what it is and how it works, we have the answers to some of the most commonly asked questions regarding COBRA Insurance so that you know what it is you are dealing with and how to use it to your advantage.

Who Does it Cover?

If you lose your job, COBRA covers everyone in your family. This includes you, your spouse, your ex-spouse, your kids and even all your other dependents. The purpose to ensure that no one is left uninsured due to job loss. Since accidents and the unexpected happen all the time, the Department of Labor wants to ensure that people are given the opportunity to retain their health coverage if they choose to do so while they look for new insurance to use when their time is up.

Is my Employer Health Care Plan Covered?

Depending on the type of coverage offered by your employer; yes, most plans are covered by the COBRA insurance act. This means that if you work for someone who has at least 20 employees, offers insurance and you lose that coverage, you are accounted for and considered as someone who qualifies for this type of coverage.

What else you should know is that there are some businesses and health care plans that are not covered by COBRA. However, many states in this country do have their own version of COBRA, which means that you can get some sort of assistance and help when you lose your job or your health care benefits by contacting the state in which you reside and/or work so that you can find out if you qualify. The rules and availabilities of these plans are different in every state, however, so it’s worth finding out if you qualify for anything at all.

How Long do I Have?

If you lose your health care or job, you have at least 60 days to decide whether or not you will continue with your healthcare coverage. This is something that you should seriously consider even if you don’t think that you need it. It is important to have health care coverage as it is what can make the difference in saving your life and your finances when circumstances are not ideal. This is the minimum amount of time in which you have to decide, but some companies, some states and some coverage allows you a little bit longer to make your decision. Additionally, you will find that it’s possible for your entire family to make the decisions independently – with the exception of minor children, of course, whose parents will make the final decision on their behalf.

And once you do elect to have the COBRA benefits you are offered enacted, you will have them anywhere from 18 to 36 months. This means you have this long to continue with your health care while you look for a new job, a new insurance policy or a new life change. The important thing is that you now have insurance, which is what matters and what counts.

Should I Elect for Continued Coverage?

While we cannot answer this question for you – only you are able to decide whether or not you can afford to do this – we can tell you that you do need health care. There are several reasons as to why you do need health insurance. The first is for your health; you never know what could happen. You might be the healthiest person on the face of the earth until someone accidentally runs into the back of your car and you suffer from serious health issues afterward. Without insurance, you might not qualify for the kind of medical care you need – and even if you do, you won’t be able to afford it.

Additionally, the federal government is now working to penalize people who do not have insurance. If you are not covered, you will pay a hefty fine at the end of the year which can have a very negative impact on your financial situation. This is something that will be determined when you file your income tax return, and it’s something that you should know about ahead of time. The price you pay to have this kind of coverage is going to depend. Your plan, the number of people on the plan and the type of additions you have on your health care plan will take effect in this manner. Each one will determine the rate you pay to have insurance, which means that you will need to keep this in consideration. The rates should be what you already pay, but if you need to know for certain you will need to contact someone at the COBRA offices or your old HR department.

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