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Cobra Insurance

In 1986, a landmark health benefit provision, the Consolidated Omnibus Budget Reconciliation Act, also known as COBRA Insurance, was passed in Congress. Amending the Employee Retirement Income Security Act (ERISA), this law allows the Internal Revenue Code and Public Health Service Act to continue group health coverage which would otherwise be terminated.

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Ordinarily less expensive than individual health care coverage, COBRA group health care coverage is usually more expensive for active employees, often due to a part of the premium being paid by the employer. COBRA Insurance contains provisions that give certain former employees, retirees, spouses, and dependent children rights to temporary continuation of health coverage at a group rate. However, this coverage is only available in specific instances:

  • Inpatient and outpatient hospital care
  • Physician care
  • Surgery and other major medical benefits
  • Prescription drugs
  • Any other medical benefits, such as dental and vision care

This law is generally what is covered in group heath plans maintained by employers with 20 or more employees in the prior year. These plans apply to those sponsored by state and local governments and the private sector {2}, however, this law does not apply to plans sponsored by the Federal government and certain church-related organizations.

Governed by ERISA, group health plans are generally sponsored by private sector employers, and are welfare benefit plans subject to requirements for reporting and disclosure, fiduciary standards, and enforcement. ERISA does not mandate the benefit level offered to plan participants, nor does it establish minimum standards or benefit eligibility for welfare plans, although there are rules which the worker is required to follow to become entitled to the benefits provided by these plans.

Cobra Insurance’s beneficiaries may include:

  • Inpatient and outpatient hospital care
  • Physician care
  • Surgery and other major medical benefits
  • Prescription drugs
  • Any other medical benefits, such as dental and vision care

Provided under the terms of the plan available for medical befits provided for the employer’s own employees and their dependents through insurance or otherwise (including things as a trust, self-funded pay-as-you-go basis, health maintenance organization, reimbursement or a combination of these), under COBRA Insurance, a group health plan.

Cobra Insurance Q & A
As an alternative, you may be eligible for a lower cost COBRA Insurance, provided you have no significant pre-existing health conditions, are in relatively good health, and your residence is not in the states of NY, NJ, MA, or VT.

Q: Why is my COBRA Insurance premium so expensive?
A: Your premiums are high because you pay an additional 5%-15% for administration of COBRA, also you are paying what the employer was paying, the full medical insurance premium.

Q: My insurance is ending soon and I still have not received my COBRA information.
A: Once you have elected to continue and make payments with the employer group, retroactive coverage will be issued. There is an allowance of up to 45 days for the employer of their COBRA Insurance plan administrator to get the information to you.

Q: How Do I Get COBRA?
A: Direct any questions you may have to do with COBRA Insurance coverage to your ex-employer or the COVRA plan administrator that the employer uses to handle COBRA benefits for their ex-employees. The entire premium amount is now your responsibility. COBRA Insurance is a federal law that allows you to continue the same benefits received while working with your employer, including pre- existing conditions. COBRA is not an insurance company or provider.