Wednesday, August 8, 2012

Know your COBRA Rights to keep health insurance coverage after a divorce

The Consolidated Omnibus Budget Reconciliation Act (COBRA) mandates that most group health plans must provide a temporary continuation of coverage that otherwise might be terminated upon divorce or other event.

COBRA requires continuation coverage to be offered to covered employees, their spouses, their former spouses, and their dependent children when group health coverage would otherwise be lost due to certain events including:
·        the death of the covered employee,
·        termination or reduction in the hours of a covered employee’s (unless fired for gross misconduct)
·        divorce or legal separation from a covered employee,
·        a covered employee’s becoming entitled to Medicare, and
·        a child’s loss of dependent status (and therefore coverage) under the plan.

Employers may require individuals who elect continuation coverage to pay the full cost of the coverage, plus a 2 percent administrative charge.

The required payment for continuation coverage is often more expensive than was previously paid for group health coverage, since the employer usually pays part of the cost of employees’ coverage and all of that cost can be charged to the individuals receiving continuation coverage. However, the COBRA payment is ordinarily less expensive than going out in the market for private individual health coverage.

Note that while COBRA continuation coverage must be offered, it lasts only for a limited period of time and so is really only a "temporary fix".

COBRA generally applies to all group health plans maintained by private-sector employers (with at least 20 employees) or by state and local governments.

DEADLINES: Just be aware that there are very strict deadlines on when you must elect and pay for COBRA coverage. If you miss one of those dates and you may miss out on coverage so do not delay in seeking information on coverage and its deadlines for election.

US Department of Labor Information on COBRA