COBRA Insurance
Although COBRA is often referred to as a type of insurance plan it is actually a law. COBRA is the acronym for the Consolidated Omnibus Budget Reconciliation Act of 1986, and in simple terms it is the law that makes employee health coverage available to former employees for a specified period of time following their departure from the company.
COBRA health insurance is a special form of group coverage insurance that covers past employees of a company, even after they have finished working for the company. This means that individuals who leave their job, for whatever reason, can remain under the cover of the group health coverage until they make alternative arrangements through their new employer or with an individual health insurance plan.
Under normal circumstances, COBRA health insurance lasts for a maximum of 18 months, during which time the ex-employee and their immediate family remains fully insured. Of course the employer no longer pays their percentage of the COBRA insurance premium and the entire amount is payable by the insured individual. Even so, the premiums are invariably lower then those of a private family health insurance plan as the group coverage rates still apply.
The exact benefits afforded by a COBRA insurance plan will depend to a large extent on what is covered by the group health coverage. In many cases the benefits include:
- Physician appointments
- Prescription drugs
- In-patient and out-patient hospital care
- Surgical procedures and other hospital treatments
- Dental and vision (provided they were originally included in the coverage)
As mentioned above, COBRA covers everyone within the immediate family of the former employee and is considered to be comprehensive in nature.
COBRA health insurance can continue to provide cover for 18 months however the sooner a new health insurance plan can be started the better. Most people choose to buy into their new employer’s group coverage, however those who have entered retirement or have started their own business need to put an individual/family health insurance plan in place before their COBRA insurance ends.
Once a new health insurance plan is up and running COBRA can simply be finished. Most COBRA plans require a 30 day period of notice but this is often the only stipulation. So, for those who are leaving their present employment to try something new the COBRA health insurance plan is well worth looking into, especially as it provides cover for an individual’s family too.