Cobra Health Coverage

What should you know about Cobra health coverage? Due to the numerous recent layoffs Texas low cost health insurance found it beneficial to provide Cobra health coverage information. Cobra is an acronym that stands for Consolidated Omnibus Budget Reconciliation Act. The act was born in 1985 for the benefit of employees who are terminated or laid off. Those employees who are terminated or laid off are eligible to continue with their current insurance plan for at least an 18 month period. In some instances those individuals covered under employer group plans (and are terminated) could benefit from cobra plans for up to 36 months given certain circumstances. These federal COBRA guidelines apply to companies that have twenty or more employees. Cobra timeline eligibility varies by state if the individual works for (is terminated from) an employer with less than twenty employees. Rather than provide the specific number of months that a terminated employee would be eligible for in each state, we will provide the information for Texas. However, additional states information may be found at the cobra health site. Terminated employees who were part of a company with less than twenty employees in Texas would be eligible for at least six months cobra coverage. Therefore, a Texas employee who has been laid off could expect to be eligible for at least 6 months cobra coverage (or the ability to have six months coverage that is equal to his or her current coverage).

Simply being eligible for COBRA health coverage is the first step. Most individuals who seek COBRA solutions are alarmed when they find that their health insurance cost has increased under COBRA. The popular misconception is that COBRA is expensive. COBRA itself is not expensive at all. In fact, COBRA is merely an extension of an individuals current insurance coverage plan cost. The difference is that when an individual is terminated or laid off, the employer is no longer liable or likely to cover the part of the insurance expense that the employer had been covering. For the sake of clarity we'll provide an example: An individual has been employed by abc employer and unfortunately is terminated. The employer has thirty five employees and offers a group health insurance plan which the employer pays fifty percent of the insurance cost ($200 is paid by the employee for insurance and $200 is paid by the employer). The terminated employee should be eligible for at least 18 months COBRA care. However, since the employer has laid off the employee the employer is no longer likely (nor required) to cover the cost to insure (or the fifty percent that the employer had been covering). Even though the federal government has provided the opportunity to receive COBRA benefits of at least 18 months, the laid off COBRA beneficiary will see his insurance cost go from $200 per month to $400 per month. There is no worse time to have increased expenses than when an individual has lost his income!

There are additional alternatives. When asked about COBRA, most individual's response is "COBRA is expensive". As we've discussed in this article, it's not that COBRA is expensive but it is the fact that the terminated individual must assume the portion of the employer's payment. Many times there are more inexpensive options by purchasing an individual health care plan. Individual health care plans are based on the health history of the individual vs. the health of a group (generally, group health plans are more expensive than an individual health care plan because the premiums are based on general health of a group). Unfortunately, when an individual has been laid off, he or she is focusing on finding that "new job" and has little time to shop for individual health plans. However, with unemployment numbers being at all time highs, the length of time that individuals are unemployed or underemployed has extended. That being the case, it would be prudent to spend time comparing individual health care plans vs. the COBRA options available. For more information regarding affordable health insurance for the unemployed, see the affordable health insurance unemployed article at the Texas low cost health insurance site. The savings could be substantial or your situation may make the COBRA option better. In any case, it's always better to be informed.


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