How COBRA Works

• COBRA health insurance provides a safety net for Americans who lose their health insurance due to a job loss or other change at work. Cobra is not a health plan. The name comes from the Comprehensive Omnibus Budget Reconciliation Act of 1986, which required employers and insurers to offer health coverage to employees who lost their health benefits.
  
  COBRA does not apply to everyone, so it's important to understand who qualifies, how to enroll and how to keep your COBRA coverage.
  
  

Qualifying for Coverage

• According to the U.S. Department of Labor, to qualify for COBRA, you must:
  
  1) work for an organization that has at least 20 employees, full and part-time. You may work for a private company, non-profit or religious group, or government agency. Your spouse and dependents also have coverage through Cobra, if you had plus-one or family coverage;
  
  2) have a qualifying event such as job loss, working fewer hours and losing health coverage, or becoming eligible for Medicare;
  
  3) enroll in the plan at least one day before the qualifying event.
  
  Spouses and children who lose group health coverage due to a life event, including divorce or death, may be eligible for COBRA.
  
  If you do not work for a company, but participated in a group health plan, you may have COBRA eligibility. The insurer will notify you if you have COBRA rights.
  
  

Enrolling under COBRA

• By law, your (former) employer must notify you about COBRA eligibility. Your employers also notify the insurance provider. The insurer will send information on how to enroll in COBRA and how much it will cost. You can take 60 days to decide whether to enroll. If you have an emergency and need health coverage before you decide to enroll, you can get retroactive COBRA coverage. In general, you must get coverage within the 60-day period. The government may change the enrollment requirements at times, depending on the economy and various stimulus efforts.
  
  

Maintaining your COBRA coverage

• Once signed up for COBRA, you keep all the health plan benefits you had as an employee. COBRA does not allow discrimination in coverage. You can see the same doctors, keep your prescriptions and use the same medical services. At the same time, you have to follow the plan's guidelines. You still need to pay for co-payments and deductibles. You must follow your plan's rules before getting approval for care.
  
  

Paying for Benefits Under COBRA

• Most employers pay a large percent of their employees' health premiums. When you sign up for COBRA, you will have to pay the entire premium yourself. Expect to pay two to four times as much. You will also have to make up any premiums you missed during the 60-day decision period.
  
  In addition, insurers may charge you a small fee for expenses related to maintaining COBRA coverage.
  
  After you decide to enroll, you have 45 more days to make a payment. You then have a 30-day grace period to make each monthly premium payment.
  
  

Exceptions to COBRA Coverage

• Employees fired for "gross misconduct" may not be eligible for COBRA.
  If an organization goes out of business, the employee health plan will probably end. In this case, there is no COBRA coverage.