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What you need to know about COBRA

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Life has a way of forcing us all to make changes now and then. Sometimes, work choices are entirely out of your control, for example when a company is forced to lay off, furlough, or reduce worker hours. Sure, we all worry about the loss of pay, but if you lose your healthcare coverage, you and your dependents may qualify to purchase extended health coverage for up to 36 months under COBRA (Consolidated Omnibus Budget Reconciliation Act).

Passed into federal law in 1986, COBRA’s continuation of health coverage is a great option if you’re between jobs and don’t want to shop for a new plan. This can be especially important if you like your current doctor or if a new provider could interrupt current treatments or medical care. However, COBRA does not extend your employer-sponsored life insurance policy.

Who and What is Covered
COBRA is a job-based insurance plan for you, your spouse, and dependents. Your benefits, which apply to private sector as well as state and local government health plans, may include inpatient and outpatient hospital care, physician care, surgeries, prescriptions, as well as dental and vision.

It's important to note that federal government plans are not eligible.

Is COBRA Expensive?
Because this kind of coverage is typically comprehensive, you will pay the full cost for COBRA premiums. Other options, such as state-sponsored healthcare plans could offer similar benefits for less cost, but might require a change in doctors and care.

Are You Eligible?
If you were enrolled in your employer’s group health plan, then you likely qualify. How long you can extend benefits, and if you qualify, depends on how you or your position was eliminated by your employer. 

You might not qualify for COBRA if you were terminated for “gross misconduct.”

Qualify for 18 months of COBRA when you retire, are terminated, become disabled, or experience a reduction in work hours. You can add an extra 11 months to your coverage if you develop a disability and become eligible for Social Security Disability Insurance during your 18 months on COBRA.

Qualify for 36 Months of COBRA if your spouse or dependent children lose insurance coverage because you became eligible for Medicare, you got divorced, if a dependent child loses their dependent status, or if you die.

You Can Lose COBRA
Don’t miss a single premium payment, or your coverage will end. If your employer stops coverage for all employees or the company goes out of business, COBRA coverage will be terminated. Additionally, if you become eligible for Medicare, your coverage will end on the date you get Medicare.

Want to learn more about COBRA? Visit the U.S. Department of Labor.